The US Federal Communications Commission (FCC) is considering or developing a measure to ban the import of new models of Chinese-made optical transceivers used in data centers. The agency aims to publish a ruling on these components before the end of this year.
The Trump administration is reportedly drafting a ban on US imports of new models of Chinese datacenter components. Under the proposed restrictions, the FCC could potentially ban the upgrading of existing 800G optical transceivers from Innolight to next-generation 1.6T models. However, the FCC could still modify or shelve the proposed restriction.
Market implications and security concerns
Zhongji Innolight, a major supplier of optical transceivers to NVIDIA and Google, currently controls 27% of the global optical transceiver market. More than 90 percent of the company's revenue comes from outside China. The company was added to the Pentagon's list of alleged Chinese military-backed companies in June.
Zhongji Innolight's current share of the optical transceiver market.
Experts state that Chinese datacenter components could allow Chinese firms to steal data, install malware, or disrupt service in the US if embedded in US infrastructure. Divyansh Kaushik, an AI policy expert at the advisory firm Beacon Global Strategies, said, 'Transceivers definitely pose a risk.' Additionally, US Treasury Secretary Scott Bessent suggested that China could be sanctioned for the theft of US data and intellectual property.
Regulatory landscape and responses
The potential move follows previous regulatory actions, including the FCC's ban on China's advanced humanoid robots announced last month and an April ban on foreign-manufactured routers.
US-based manufacturers of optical transceivers include Coherent Corp. and Lumentum.
The Chinese embassy in Washington told Reuters that Beijing urges the US to 'heed the objective and rational voices of the business communities in both countries' and 'stop smearing Chinese companies and threatening them with sanctions.' The embassy also stated that 'China will take all necessary measures in response to any action that causes material harm to its interests.'
