Trump administration drafts ban on Chinese data center components: Reuters

The Trump administration is drafting a ban on imports of new Chinese data center components as the US seeks to secure infrastructure supporting the expansion of artificial intelligence, according to Reuters.

The Federal Communications Commission is working on a measure that would block imports of new Chinese optical transceiver models. The components convert electrical signals into light, allowing information to travel through fiber optic cables inside data centers. Officials aim to publish the restriction before the end of 2026, when it would take effect.

The proposal is intended to address concerns that Chinese equipment could be used to access data, install malicious software or disrupt operations at US data centers. The restriction could still be changed or abandoned before publication, according to people familiar with the discussions.

Shares of US optical equipment companies rose following the report. Applied Optoelectronics gained about 20%, Coherent climbed 14% and Lumentum advanced more than 9% in Tuesday trading.

The proposed ban would likely affect Zhongji Innolight, one of the world’s largest suppliers of optical transceivers. The company controls approximately 27% of the global data center transceiver market and generates around 90% of its revenue outside China, according to figures cited by Reuters.

Innolight was added to the Pentagon’s list of companies allegedly connected to the Chinese military in June. The company did not respond to requests for comment.

A restriction could require US cloud providers, including Amazon Web Services, to purchase more equipment from suppliers such as Coherent and Lumentum. Reuters reported that US companies currently lack the scale to completely replace Chinese transceiver manufacturers.

The Chinese embassy in Washington urged the US to stop threatening Chinese companies with sanctions and said Beijing would take necessary measures against actions that materially harm its interests. The White House and the FCC did not comment on the draft measure.

The FCC would reportedly impose a broad restriction on new transceiver models before granting exemptions to many suppliers outside China. The agency’s equipment authorization system requires covered radio frequency devices to receive approval before they can be imported or sold in the US.

The FCC has used its Covered List to restrict equipment from foreign companies considered national security risks. The agency has recently imposed similar measures involving Chinese drones, routers, power inverters and robots.

The Commerce Department previously considered restrictions targeting Chinese data center equipment but shelved them following a trade agreement between Washington and Beijing last year.