Avoiding Huawei's Fate? US Moves to Ban Chinese Data Center Components, AI Infrastructure Again Choked by National Security Concerns

Multiple sources have told Reuters that the Trump administration is drafting an executive order to ban the import of new Chinese-made data center components. The move aims to safeguard the infrastructure fueling the artificial intelligence (AI) boom.

According to Reuters, the Federal Communications Commission (FCC), which oversees the U.S. telecommunications industry, is developing a measure to prohibit the import of new Chinese-made optical transceivers. These devices enable data to travel at the speed of light through fiber-optic cables within data centers. Officials hope to issue the ban this year to prevent Chinese companies from stealing data, implanting malicious software, or disrupting services in U.S. data centers.

The White House and the FCC did not respond to Reuters’ requests for comment. China’s embassy in Washington urged the U.S. to 'listen to the objective and rational voices of businesses from both countries' and 'stop smearing Chinese companies and threatening sanctions.' The embassy added: 'China will take all necessary measures in response to any substantive actions that harm China’s interests.'

Hardliners within the Washington government are determined to avoid repeating the Huawei precedent—when the heavily sanctioned Chinese company’s telecom equipment had already become deeply embedded in U.S. infrastructure, making subsequent removal efforts slow, costly, and difficult to complete.

A U.S. ban on new Chinese data center equipment could impact Zhongji Innolight, one of the world’s largest suppliers of optical transceiver modules, which was added in June to the Pentagon’s list of companies suspected of ties to the Chinese military.

Data from Counterpoint Research shows that Innolight holds a leading 27% share in the global data center optical transceiver module market, with 90% of its revenue coming from markets outside China.

Reuters reported in February that the U.S. Department of Commerce had shelved a batch of import restrictions targeting China after a thaw in trade tensions last October, including a proposed restriction on Chinese data center equipment.

However, the FCC subsequently stepped in, announcing bans on drones in December last year and routers in March this year. These bans are implemented under the commission’s so-called 'Covered List,' established by Congress to prohibit future sales by foreign companies whose products pose national security risks. Last week, restrictions on Chinese-made inverters and robots were also announced.