U.S. Plans Ban on Chinese Data Parts
PHOTO CAPTION: FILE PHOTO: A drone view of the Digital Realty data center in Oakland, California, U.S., July 18, 2026. REUTERS/Fred Greaves/File Photo
WASHINGTON, Aug. 4 — The Trump administration is drafting a ban on U.S. imports of new Chinese-made data center components as it seeks to protect infrastructure supporting the artificial intelligence boom, four people familiar with the matter told Reuters.
The Federal Communications Commission is developing the measure, which would block imports of new Chinese optical transceiver models.
Optical transceivers allow data to travel through fiber-optic cables within data centers, which house the computer chips used to train and operate AI models.
Officials hope to publish the restriction this year, when it would take effect, the sources said.
The previously unreported measure is intended to reduce the risk that Chinese companies could steal data, install malware or disrupt service at U.S. data centers.
The FCC could still change or abandon the proposed restriction, the sources cautioned. They spoke on condition of anonymity because the discussions are sensitive.
The proposal is the latest attempt by the Trump administration to limit the use of Chinese technology in advanced U.S. industries before it becomes deeply embedded in supply chains.
“Transceivers definitely pose a risk,” said Divyansh Kaushik, an AI policy expert at Beacon Global Strategies.
“As the data center buildout scales up, you want to make sure the data center supply chain is secure from the get-go,” he added.
Shares of U.S. transceiver manufacturers viewed as possible beneficiaries rose after the Reuters report.
Lumentum gained 7%, Coherent rose 11% and Applied Optoelectronics jumped 18%.
China warns it may respond
The White House and FCC did not respond to requests for comment.
China’s embassy in Washington urged the United States to listen to what it called objective and rational voices in the business communities of both countries.
It also called on Washington to stop “smearing Chinese companies and threatening them with sanctions.”
“China will take all necessary measures in response to any action that causes material harm to its interests,” the embassy said.
A ban on new Chinese data center devices would likely affect Zhongji Innolight, one of the world’s largest optical transceiver suppliers.
The Pentagon added Innolight in June to a list of companies it alleges are backed by the Chinese military. Placement on the list can precede further U.S. restrictions.
Innolight did not respond to a request for comment.
The company holds about 27% of the global data center transceiver market, according to Counterpoint Research.
A Foundation for American Innovation report said U.S.-based Coherent and Lumentum offer competing technology but do not have enough scale to replace Chinese suppliers fully.
The report said Innolight earns 90% of its revenue outside China.
Ban could increase costs for U.S. cloud companies
The restriction could raise costs for American cloud-service providers such as Amazon Web Services by forcing them to switch to other manufacturers.
AWS, Coherent and Lumentum did not respond to requests for comment.
Officials seeking the ban want to avoid a repeat of the experience involving Huawei.
Equipment made by the heavily sanctioned Chinese telecommunications company became so deeply integrated into U.S. infrastructure that attempts to remove it have been slow, costly and incomplete.
Huawei denies U.S. accusations of intellectual property theft and state-sponsored espionage.
The FCC has historically operated as an independent agency.
In June, however, the U.S. Supreme Court supported President Donald Trump’s firing of a Democratic Federal Trade Commission member, expanding his authority over parts of the federal government, including certain regulatory agencies.
FCC expands restrictions on Chinese technology
The FCC has imposed similar restrictions on Chinese drones, routers, robots and power inverters, Reuters previously reported.
Under the planned approach, the agency would ban imports of all new transceiver models and then exempt many suppliers based outside China, three sources said.
During his first term, Trump focused heavily on alleged intellectual property theft by Chinese companies and accusations of Chinese state-sponsored espionage.
His administration has taken a less aggressive approach during his second term following Beijing’s use of export restrictions on rare-earth minerals last year.
Reuters reported in February that the Commerce Department had shelved several proposed restrictions on Chinese imports following a trade-war détente in October.
Those measures included a proposed restriction targeting Chinese data center equipment.
The FCC has since taken action through its Covered List, which Congress created to prevent future equipment sales by foreign companies whose products are considered national security risks.
The agency announced restrictions involving Chinese drones in December and routers in March. Measures involving Chinese inverters and robots followed last week.
(Source: Reuters)
