Microsoft lobbies against potential FCC ban on Chinese optical transceivers, warning of stalled AI data center rollout
Microsoft and the ITI are lobbying the White House and FCC against a proposed import ban on Chinese optical transceivers. With Chinese firms holding 66% of the global market, the ban could severely delay US AI data center construction.
According to Reuters, Microsoft is lobbying the US government against a plan by the Federal Communications Commission (FCC) to potentially ban imports of Chinese optical transceivers. The company has reportedly met with the White House Office of Science and Technology Policy and the National Security Council, working alongside the Information Technology Industry Council (ITI).
Optical transceivers are critical components in data centers, converting electrical signals into light signals to transmit data at high speeds between AI GPUs and server racks via fiber optics. Chinese companies currently supply 66% of the global market. A ban would more than halve the available supply in the US, exacerbating existing shortages.
John Miller, Executive Vice President of Policy and General Counsel at ITI, stated that the move "really threatens to arguably grind (the data center rollout) to a halt." He noted that without these transceivers, purchased AI chips would sit idle waiting for connectivity. While there are security concerns regarding potential data theft or remote disruption from Chinese equipment, only two US-based companies, Coherent and Lumentum, produce the necessary optical transceivers, and they lack the immediate scale to replace Chinese supply.
A compromise floated by the Trump administration involves banning only Chinese optical transceivers capable of hitting 3.2 terabits per second. Although this technology exists, mass production is not expected to expand until 2028, with installation beginning in 2029. This proposal aims to give American producers time to ramp up output but remains under consideration.