Trump administration drafts ban on Chinese data center devices, sources say

• The ban would primarily impact China's Zhongji Innolight, which holds a 27% market share and was added to the Pentagon's list of alleged Chinese military-backed companies in June
• U.S. cloud providers like Amazon Web Services may face higher costs as they transition to alternative suppliers such as Coherent and Lumentum
• The measure follows a pattern of FCC restrictions on Chinese tech firms and aims to avoid repeating the Huawei situation, where embedded Chinese equipment proved slow and expensive to remove

Summary: Trump Administration Drafts Ban on Chinese Data Center Devices

The Trump administration is preparing to ban U.S. imports of new Chinese data center components, specifically optical transceivers that enable high-speed data transmission over fiber-optic cables within data centers. The Federal Communications Commission (FCC) is drafting the measure, which officials aim to publish and implement this year.

Key Target: The restriction would primarily impact China's Zhongji Innolight, which holds a 27% global market share in transceivers and was added to the Pentagon's list of alleged Chinese military-backed companies in June. The company has not responded to requests for comment.

Rationale: The measure seeks to prevent Chinese firms from stealing data, installing malware, or disrupting service at U.S. data centers that house critical AI infrastructure. Administration officials aim to avoid a repeat of the Huawei situation, where deeply embedded Chinese equipment proved difficult and expensive to remove.

Market Impact: The ban could increase costs for major U.S. cloud providers like Amazon Web Services (AWS), forcing them to transition to alternative suppliers. U.S.-based companies Coherent and Lumentum would likely benefit from the restrictions.

Policy Context: This continues Trump's second-term approach of using the FCC's "Covered List" to restrict Chinese technology suppliers. Similar bans have already been imposed on Chinese drones, routers, inverters, and robots. However, sources note the restriction could still be modified or shelved.

China's Response: The Chinese embassy warned that Beijing "will take all necessary measures in response to any action that causes material harm to its interests" and urged the U.S. to cease threatening Chinese companies with sanctions.