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

The Trump administration is preparing new rules to ban the import of the latest models of Chinese-made data centre components into the United States, a move that further sharpens the geopolitical conflict between Washington and Beijing. The Federal Communications Commission (FCC), the US telecommunications regulator, is drafting regulations to block the import of new optical transceiver models from China. These crucial components transfer data between servers at lightning speed via fibre optic cables within data centres. The regulation is targeted to be issued and become effective this year. The previously undisclosed restriction plan targets potential threats of data theft, malware infiltration, and the risk of sabotaging US data centre services that house advanced chips powering artificial intelligence. While the option to modify or delay the policy remains open, the manoeuvre reaffirms Washington’s aggressive stance to sever China’s technology supply chain before it becomes deeply rooted in strategic US industries. “Transceivers clearly pose a significant risk. As data centre construction accelerates, supply chain security must be guaranteed from the very beginning,” said Divyansh Kaushik, an AI policy expert at Beacon Global Strategies. The signal of a blockade immediately provided a boost for US-based transceiver manufacturers. Shares of Lumentum jumped 7%, Coherent surged 11%, while Applied Optoelectronics soared by 18%. Responding to the news, the Chinese Embassy in Washington urged the US to act rationally and stop the narrative of defamation and threats of sanctions against Chinese corporations. “China will take all necessary measures to respond to any actions that cause material harm to our national interests,” the embassy stated. If enacted, the import ban could hit Chinese transceiver giant Zhongji Innolight, which controls 27% of the global data centre transceiver market. The company was previously added by the Pentagon to a list of firms supported by the Chinese military in June. The sanctions would also impact the soaring operational expenditure of major cloud computing service providers like Amazon Web Services, as they would be forced to migrate to US producers such as Coherent and Lumentum, which have more limited production scale compared to Chinese suppliers. Anti-China groups within the US administration are determined to avoid a repeat of the “Huawei case”, where 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 also placed Chinese-made drones, routers, robots, and inverters on a blacklist due to perceived threats to US national security.