US drafts ban on Chinese data center transceivers

The Trump administration, through the United States — Federal Communications Commission (FCC), is drafting a ban on US imports of new models of Chinese optical transceivers used in data centers. The measure aims to prevent Chinese firms from stealing data, installing malware, or disrupting service at US data centers that support AI training and cloud computing. The FCC plans to publish the rule this year, though it could still be modified or shelved. The ban would primarily affect Zhongji Innolight, which holds about 27% of the global data center transceiver market and generates 90% of its revenue outside China. US cloud providers such as Amazon — Amazon Web Services may face higher costs as they transition to alternative suppliers like Coherent and Lumentum, whose shares rose on the news. China's embassy warned that Beijing will take all necessary measures in response to any action that causes material harm to its interests. The move extends the FCC's use of its Covered List, which has already restricted Chinese drones, routers, robots, and inverters.