The Trump administration is drafting a ban on U.S. imports of new Chinese data center components, targeting optical transceivers to protect artificial intelligence infrastructure.
The federal government is moving to tighten control over the critical hardware underpinning the domestic artificial intelligence boom. Four people familiar with the matter told Reuters that the Trump administration is actively drafting restrictions to block new models of Chinese-made data center components from entering the U.S. market.
The Federal Communications Commission is leading the measure, which specifically targets optical transceivers. These devices allow data to travel over fiber-optic cables at the speed of light within data centers. Officials hope to publish the rule this year, at which point it would take immediate effect for newly manufactured equipment.
National Security Risks and Supply Chain Protections
The proposed import ban seeks to prevent foreign entities from stealing data, installing malware, or disrupting operations at U.S. facilities that house the advanced chips required to train and run large AI models. Administration officials are eager to avoid repeating past vulnerabilities, pointing to heavily sanctioned telecommunications equipment from Huawei that became so deeply embedded in domestic infrastructure that removal efforts proved slow, expensive, and incomplete.
Transceivers definitely pose a risk,
said Divyansh Kaushik, an AI policy expert at Washington, D.C., advisory firm 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.
This initiative coincides with broader trade measures announced by U.S. officials targeting imports of connected power inverters, humanoid robots, and quadruped robots manufactured in China. Power inverters serve as the essential hardware linking renewable energy sources, battery storage systems, and data center equipment to the electrical grid.
Market Impact on Global Manufacturers and Cloud Providers
A restriction on new transceiver models would directly affect China’s Zhongji Innolight, which holds a leading 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 generates 90% of its revenue outside China.
American cloud computing giants like Amazon Web Services could face rising costs as a result of the policy shift. The restrictions may force domestic firms to transition toward alternative suppliers such as U.S.-based Coherent and Lumentum. However, a report from the Foundation for American Innovation notes that while these domestic competitors offer similar technology, they currently lack the scale to replace Chinese vendors.
Diplomatic Friction and Economic Stakes
The Chinese embassy in Washington issued a strong rebuke against the unfolding regulatory actions. Officials in Beijing urged the United States to heed the objective and rational voices of the business communities in both countries
and 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 push for data center component curbs arrives after months of shifting trade policies. Earlier in the year, the Commerce Department shelved a group of import restrictions targeting Chinese tech equipment following a trade war détente reached last October. With the FCC stepping in independently to draft new rules, the administration continues to recalibrate its approach to industrial security.
The restrictions apply only to newly manufactured models, not equipment that’s already been authorized for import.
The President has made clear that the United States must have independent and secure supply chains for critical and emerging technologies like robotic devices and power inverters,
said an administration official, who declined to be named because the matter was not public. Economic security is national security, and the Trump administration continues to implement a nuanced and multi-faceted policy agenda to reindustrialize America,
he added.
Although the FCC and the White House did not respond to requests for comment, the sources emphasized that the proposed restriction on transceivers could still be modified or shelved before publication.