WASHINGTON: Microsoft is urging the Trump administration to abandon a proposed ban on imports of Chinese optical transceivers, a key component used in artificial intelligence data centers, Reuters reported Tuesday.
The Federal Communications Commission (FCC) is working on the proposed restriction, which the administration has been considering since at least August, according to the report.
Optical transceivers enable data transmission through fiber-optic cables inside data centers. US officials have raised concerns that Chinese-made equipment could allow Beijing to hack data, introduce malware into systems or disrupt data center operations.
China accounts for about two-thirds of the global optical transceiver market, according to Counterpoint Research. Chinese suppliers include Eoptolink and Zhongji Innolight, the latter of which appears on the Pentagon's list of Chinese companies allegedly supporting the country's military.
The Information Technology Industry Council's general counsel warned that restrictions could disrupt the expansion of US AI infrastructure.
"Many cloud companies have already bought the AI chips for their buildouts, and without transceivers to connect them, the chips could just sit there waiting around unutilized," the official said.
US companies Coherent and Lumentum produce competing optical technology but lack sufficient manufacturing capacity to replace Chinese suppliers, the report said.
The FCC is also considering setting a restriction threshold of 3.2 terabits per second, according to Reuters. Transceivers operating at that level are not expected to be widely available until 2028.
A full implementation of the proposed ban in 2029 could give US manufacturers time to expand production capacity while reducing disruption to domestic technology companies and limiting tensions with Beijing.
