Microsoft Presses Trump to Drop Ban on Chinese Data Center Components

Microsoft has pressed the Trump administration to drop plans to block imports of new models of Chinese optical transceivers, components that link equipment inside AI data centers.

The company has 35 data centers under construction in the U.S. and another 134 planned, according to Cleanview, which tracks the sector.

Microsoft and other companies and trade groups argue that restricting supplies could slow construction and erode the U.S. lead over China in artificial intelligence, three people familiar with the lobbying told Reuters.

Microsoft was among a handful of companies that raised supply concerns with the White House Office of Science and Technology Policy and the National Security Council, two of the people said.

The meeting came weeks after Reuters first reported the proposed ban in August.

The Federal Communications Commission (FCC) is developing the restrictions over concerns that Beijing could use the devices to steal data, plant malware or disrupt operations at U.S. data centers.

Microsoft declined to comment to Reuters. The White House and the FCC did not respond to the news agency’s requests for comment.

China’s Share of Global Supply

Optical transceivers carry data over fiber-optic cables between servers, routers and switches. Some data centers require millions of them.

John Miller of the Information Technology Industry Council said many cloud companies had already bought the AI chips they need and could be left with idle hardware if they could not get the transceivers to connect them.

China accounts for two-thirds of the global optical transceiver market, according to Counterpoint Research.

U.S. suppliers Coherent and Lumentum make competing products but lack the scale to replace Chinese vendors, according to the Foundation for American Innovation.

The House Select Committee on China has urged the FCC to proceed, pointing to the Pentagon’s listing of Zhongji Innolight, a major Chinese supplier.

The Chinese embassy in Washington said Beijing “firmly opposes the U.S. overstretching the concept of national security and abusing state power to unjustifiably suppress Chinese companies.”

A Possible Speed Threshold

Two people told Reuters that officials were considering a threshold of 3.2 terabits per second.

Morgan Stanley said in an October note that production of transceivers at that speed was unlikely to ramp up before 2028, with widespread installation expected in 2029.

A bipartisan group of lawmakers introduced a separate bill in September to bar the federal government from using Chinese-made optical transceivers in sensitive government systems.