WASHINGTON (Realist English). Microsoft and a number of industry groups are pressuring the administration of President Donald Trump to abandon plans by the Federal Communications Commission (FCC) to ban imports of new models of Chinese optical transceivers. Three sources familiar with the situation reported this. Microsoft itself declined to comment, as did the White House and the FCC.
What exactly could be banned
The measure concerns optical transceivers — components that transmit data over fiber optic cables at the speed of light inside data centers and connect servers, routers and switches.
According to Reuters, the administration is considering a ban on new Chinese-made models over concerns that Beijing could use them to steal data, install malicious software or disrupt the operation of US data centers. The FCC, which regulates the telecom industry, is drafting the corresponding ban.
Microsoft’s arguments: risk of construction halt
Microsoft is one of the largest data center operators in the US: according to Cleanview, the company has 35 facilities under construction and another 134 planned. The company is among the firms that met with representatives of the White House Office of Science and Technology Policy and the National Security Council in September to highlight supply chain problems if the ban is adopted.
Industry lobbyists make a concrete argument: many cloud companies have already purchased AI chips, but without transceivers they cannot be put into operation.
“These chips will literally sit idle without the transceivers that connect them together,” said John Miller, general counsel of the Information Technology Industry Council (ITI). On 13 August, ITI sent a letter to the FCC urging it not to add optical transceivers to the trade blacklist, citing “the potential consequences of supply disruptions for data center deployment and US leadership in AI.”
Dependence on Chinese suppliers
China controls about two-thirds of the global optical transceiver market. Companies such as Eoptolink and Zhongji Innolight (the latter added to the Pentagon’s list as linked to the Chinese military) dominate global supplies and are among the suppliers to leading US hyperscalers. US manufacturers Coherent and Lumentum produce competitive products, but according to the Foundation for American Innovation, they do not have sufficient scale to replace Chinese suppliers.
Compromise option: 3.2 Tbit/s threshold
According to Morgan Stanley, the administration is considering banning only those Chinese transceivers capable of handling 3.2 terabits per second.
Production of such models is expected to ramp up no earlier than 2028, with mass installation in 2029. Such a threshold would avoid an immediate conflict with US companies and Beijing, giving US manufacturers time to expand capacity. The FCC has not publicly commented, but two sources confirmed that the 3.2 Tbit/s threshold is under discussion.
The situation around optical transceivers exposes a fundamental contradiction in US policy: the desire to secure critical infrastructure from Chinese influence clashes with the harsh reality of supply chains where alternatives to Chinese components at the required scale do not yet exist.
Microsoft and the industry are seeking not the cancellation of the ban as such, but a delay or softening so as not to halt the construction of data centers for which chips have already been purchased. The compromise threshold of 3.2 Tbit/s looks like an attempt to buy time, but the key question is whether US manufacturers can ramp up capacity by 2028–2029, or whether the ban will still slow down US AI infrastructure. For Microsoft, whose expansion plans run into dozens of facilities, this is not an abstract risk but a direct threat to the timelines for bringing capacity online.
