US Prepares to Block Chinese Data Centre Components, Escalating Tech War

Jakarta, CNBC Indonesia - The Donald Trump administration has once again issued blocking sanctions against Chinese-made products, specifically targeting data centre components. This further sharpens the geopolitical conflict between the United States and China.

According to a Reuters report on Wednesday (5/8/2026), the Trump administration is reportedly drafting a new rule that would prohibit the import of the latest models of Chinese data centre components into the US. The step is intended to fence off national infrastructure that serves as the foundation of the artificial intelligence (AI) cold war.

The Federal Communications Commission (FCC), the US telecommunications regulator, is designing rules to block imports of new-model optical transceivers from China. This crucial component transfers data between servers at lightning speed via fibre optic cables inside data centres. The regulation is targeted to be issued and take immediate effect this year.

The previously undisclosed restriction plan targets potential threats of data theft, malware infiltration and the risk of sabotage to US data centres, which house the advanced chips underpinning AI.

Nevertheless, the option to modify or postpone this policy remains wide open. However, the manoeuvre reaffirms Washington’s aggressive stance of cutting off Chinese technology supply chains before they take deep root in strategic US industries.

“Transceivers clearly carry significant risks. As data centre construction continues to accelerate, supply chain security must be guaranteed from the very beginning,” said Divyansh Kaushik, an AI policy expert at Beacon Global Strategies, quoted by Reuters.

The blocking signal immediately proved a breath of fresh air for US-based transceiver producers. Shares in Lumentum (LITE) jumped 7%, Coherent (COHR) soared 11%, whilst Applied Optoelectronics (AAOI) flew as much as 18%.

China Furious, Threatens Retaliation

In response to the news, the Chinese Embassy in Washington urged the US to act rationally and stop smearing China’s reputation and threatening sanctions against Chinese corporations.

“China will take all necessary measures in response to any action that causes material harm to our national interests,” the embassy declared.

If ratified, the import ban could hammer China’s transceiver giant Zhongji Innolight (300308.SZ). The company, which controls 27% of the global data centre transceiver market, was previously placed by the Pentagon on its list of companies backed by the Chinese military in June.

The sanctions are also likely to drive up operating costs (opex) for cloud computing giants such as Amazon Web Services (AWS), as they would be forced to migrate to US producers such as Coherent and Lumentum, which have far more limited production scale than Chinese suppliers.

Anti-China groups within the US government are determined to avoid a repeat of the “Huawei case”, in which Chinese telecommunications equipment had already become too deeply embedded in US infrastructure, making the clean-up process fantastically expensive and slow.

Previously, the FCC had already carried out a similar ‘clean-up’ by placing Chinese drones, routers, robots and inverters on its blacklist (Covered List) on grounds that they threatened US national security.