The administration of US President Donald Trump is drafting a measure that would prohibit imports of new models of Chinese-made data centre components, according to a Reuters report citing four people familiar with the matter. The proposed restrictions would focus on optical transceivers used in data centres, marking the latest effort by Washington to strengthen the security of infrastructure supporting the rapid expansion of artificial intelligence.
According to Reuters, the Federal Communications Commission (FCC), which regulates the US telecommunications industry, is preparing the measure to bar imports of new Chinese optical transceivers. These components enable data to travel through fibre-optic cables at high speed within data centres, where advanced computer chips are used to train and operate AI models. Officials reportedly hope to publish the measure later this year, after which it would take effect.
Reuters reported that the proposal is intended to prevent Chinese companies from gaining opportunities to steal data, install malware or disrupt operations at US data centres. However, the sources cautioned that the FCC could still amend or abandon the proposal, noting that discussions remain ongoing. If implemented, the measure would represent another step by the Trump administration to limit the presence of Chinese technology in strategic US industries before it becomes deeply embedded in critical supply chains.
Divyansh Kaushik, an AI policy expert at Washington-based advisory firm Beacon Global Strategies, told Reuters that optical transceivers present genuine security concerns. “Transceivers definitely pose a risk,” he said, adding that as data centre construction accelerates, securing the supply chain from the outset is essential.
Financial markets reacted positively to the report. Shares in US-based optical transceiver manufacturers rose after the news emerged, with Lumentum gaining 7%, Coherent rising 11%, and Applied Optoelectronics climbing 18%, reflecting expectations that domestic producers could benefit if Chinese competitors are restricted.
The White House and the FCC did not respond to Reuters’ requests for comment. China’s embassy in Washington 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.” The embassy also warned that “China will take all necessary measures in response to any action that causes material harm to its interests.”
According to Reuters, the proposed restrictions would likely affect Zhongji Innolight, one of the world’s largest suppliers of optical transceivers. The company was added to the Pentagon’s list of alleged Chinese military-backed companies in June, a designation often viewed as a precursor to stronger US government action. Innolight did not respond to Reuters’ request for comment.
The report noted that the restrictions could also increase costs for major American cloud computing providers, including Amazon Web Services, by requiring them to source equipment from alternative manufacturers such as Coherent and Lumentum. Reuters cited Counterpoint Research as estimating that Innolight holds a 27% share of the global data centre transceiver market, while a report by the Foundation for American Innovation concluded that although US firms offer competing technology, they currently lack the manufacturing scale needed to replace Chinese suppliers. The same report stated that Innolight derives approximately 90% of its revenue from markets outside China.
Reuters reported that officials within the Trump administration are determined to avoid a repeat of the Huawei experience, when Chinese telecommunications equipment became so extensively integrated into US infrastructure that removing it proved costly, time-consuming and incomplete. Although the FCC has traditionally operated independently, Reuters noted that a US Supreme Court ruling in June expanded President Trump’s authority over certain regulatory agencies after upholding his dismissal of a Democratic member of the Federal Trade Commission.
The proposed restrictions would follow a series of similar FCC measures targeting Chinese drones, routers, robots and power inverters, Reuters reported. Under the current proposal, imports of all new Chinese transceiver models would be prohibited, while many non-Chinese suppliers would be exempt from the restrictions, according to three of the sources cited by Reuters.
The latest initiative also reflects evolving US policy towards China. Reuters noted that President Trump highlighted alleged intellectual property theft and concerns over Huawei during his first term, while his second administration initially adopted a less confrontational approach following Beijing’s export controls on rare-earth minerals. Reuters previously reported in February that the Commerce Department had shelved several proposed import restrictions on Chinese technology after a trade détente last October. However, the FCC has since pursued its own regulatory actions through its Covered List, established by Congress to block future equipment sales by foreign companies whose products are considered national security risks.
