The Federal Communications Commission is drafting a ban on U.S. imports of new Chinese optical transceivers used inside AI data centers, four people familiar with the matter told Reuters. Officials hope to publish the rule this year, extending a run of FCC actions against Chinese hardware that has already hit drones, routers, robots and power inverters.
The Federal Communications Commission is drafting a ban on U.S. imports of new models of Chinese optical transceivers, the components that move data across fiber-optic cables inside AI data centers, four people familiar with the matter told Reuters. Officials hope to publish the rule this year, when it would take effect.
It aims to stop Chinese firms from stealing data, installing malware or disrupting service at U.S. data centers that house the chips used to train and run AI models. The FCC could still modify or shelve the restriction, sources cautioned, but the move fits a broader pattern of the Trump administration blocking Chinese technology before it becomes embedded in the supply chain.
Innolight faces the biggest hit
A ban would likely strike hardest at China's Zhongji Innolight, which holds a 27% share of the global data center transceiver market, according to Counterpoint Research. Innolight was added to the Pentagon's list of alleged Chinese military-backed companies in June, and it generates 90% of its revenue outside China, according to a report from the Foundation for American Innovation.
U.S. rivals Coherent and Lumentum sell competing technology but lack the scale to replace Chinese vendors outright, the report added. American cloud providers such as Amazon Web Services could face higher costs if they need to shift purchases toward those non-Chinese suppliers.
Echoes of the Huawei problem
China hawks inside the administration want to avoid repeating the experience with Huawei, whose telecom equipment became so embedded in U.S. infrastructure that removing it proved slow, expensive and incomplete. According to Beacon Global Strategies AI policy expert Divyansh Kaushik: "Transceivers definitely pose a risk." He added that as the data center buildout scales up, the supply chain needs to be secure from the start.
The Chinese embassy in Washington pushed back, urging the U.S. to consider the views of business communities in both countries and warning that China will take all necessary measures in response to any action that causes material harm to its interests.
Part of a broader clampdown
This transceiver proposal would extend a run of FCC actions against Chinese hardware. The agency's Covered List already blocked Chinese drones in December and routers in March. It also added connected power inverters and humanoid and quadruped robots on July 28.
Not every China-focused restriction has moved forward, however. The Commerce Department shelved a separate group of import restrictions on Chinese data center equipment in February, following a trade war détente with Beijing the previous October.
Sources: Reuters (via Investing.com), Crypto Briefing
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