According to a report by Reuters, Microsoft is urging the Trump administration to reconsider a proposed restriction on imports of optical transceivers from China.
These components are vital to the operation of AI data centres. US telecoms regulator, the Federal Communication Commission (FCC), has been considering this ban since August. Government officials’ main concern is that Beijing could exploit these devices to compromise security through malware, service disruptions or data theft.
Microsoft, along with several industry associations, argues that such a ban would undermine US leadership in artificial intelligence by slowing the development of essential infrastructure.
Data from Cleanview shows the scale of Microsoft’s expansion. The company is building 35 data centres in the United States and has another 134 at the planning stage. To highlight supply chain vulnerabilities, Microsoft joined a small group of companies in September for talks with national security and science officials at the White House.
The potential consequences for the sector are substantial, as some data centres need millions of these transceivers to connect switches, routers and servers.
John Miller of the Information Technology Industry Council warned that the rollout of data centres could effectively grind to a halt. He noted that many cloud providers have already purchased AI chips, but that these expensive components would remain unused without the transceivers needed to connect them.
US suppliers would struggle to replace Chinese production in the short term, as China controls around two-thirds of the global market.
Companies such as Zhongji Innolight, which the Pentagon has placed on its list of Chinese companies with alleged military ties, and Eoptolink are leaders in the sector. Although US companies such as Lumentum and Coherent offer comparable technology, they currently lack sufficient production capacity to make up for the loss of Chinese suppliers.
To mitigate these risks, the FCC could introduce a specific performance threshold, potentially targeting devices capable of handling 3.2 terabits per second. As this technology is not expected to be widely adopted until 2029, such an approach would give US manufacturers time to scale up production. At the same time, the measure could limit direct clashes with the technology sector and the Chinese government.
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