US Weighs Ban on Chinese Data Center Equipment Amid AI Infrastructure Concerns

The Trump administration is preparing a ban on imports of new Chinese made data center components, according to people familiar with the matter. The Federal Communications Commission is working on a measure that would block new Chinese optical transceivers, devices that allow data to move through fiber-optic cables at high speed inside data centers. Officials hope to publish the rule this year, with the aim of protecting infrastructure that supports AI development.

Security Concerns Drive the Move

The proposed restriction is intended to prevent Chinese companies from stealing data, planting malware or disrupting operations at US data centers that house AI training and computing hardware.

Sources cautioned the measure could still be revised or dropped entirely before finalization. An AI policy expert at a Washington advisory firm noted that transceivers carry genuine risk, arguing that data center supply chains need to be secured early as buildout accelerates.

China Signals It Will Respond

The Chinese embassy in Washington pushed back, urging the US to listen to business voices in both countries rather than continuing what it called unfair targeting of Chinese firms, and warned Beijing would respond to any action harming its interests. Within the administration, officials pushing for tougher China policy want to avoid repeating past challenges, referencing how deeply embedded Chinese telecom equipment became in US networks before restrictions were eventually imposed.

Market Impact Could Be Significant

A ban would likely affect Zhongji Innolight, a major Chinese transceiver supplier recently added to a Pentagon list of companies allegedly tied to China’s military. The company holds roughly 27% of the global data center transceiver market, and generates most of its revenue outside China. American cloud providers like Amazon Web Services could face higher costs shifting to alternative suppliers such as Coherent and Lumentum, US-based firms that lack the scale to fully replace Chinese vendors according to policy researchers.