TodayToday's edition
Microsoft is lobbying against an FCC ban on new Chinese optical transceivers, three people familiar told Reuters on Nov. 10, while it has 35 US data centers under construction and 134 planned.
Chips & Power DeskEdited by Ege Erten
3 min readAI-assisted
A Microsoft AI datacenter campus under construction. The photo is an earlier official Microsoft image, not a site named in the story.
Image: Microsoft
Source · Press image from the Microsoft newsroom, used for news reporting.
Microsoft has been pressing the Trump administration to halt plans to bar Chinese imports of optical transceivers, a key component of AI data centers, three people familiar with the situation told Reuters on Nov. 10. Microsoft declined to comment.
Reuters reported in August that the administration wants to ban US imports of new models of Chinese optical transceivers, the modules that carry data over fiber-optic cables inside data centers. The stated concern is that Beijing could use them to steal data, install malware or disrupt service. The Federal Communications Commission (FCC) is working on the ban, according to Reuters, and neither the White House, the FCC nor the Chinese embassy responded to requests for comment.
According to Reuters, Microsoft is one of a group of companies and trade groups arguing that a ban could damage the US lead over China in AI by slowing the data center rollout further. Two of the sources said Microsoft was among a handful of firms that met officials from the White House Office of Science and Technology Policy and the National Security Council in September to flag the supply chain problems.
Reuters cited Cleanview, a market intelligence firm that tracks data center development, as counting 35 Microsoft data centers under construction in the US and another 134 planned. Some data centers need millions of optical transceivers to link servers, routers and switches, so a supply gap lands on every one of those sites. That adds a new constraint on top of the local pushback and permitting fights Voltgrid has covered, such as the dewatering approval for Microsoft's Granger campus in Indiana.
John Miller, general counsel of the Information Technology Industry Council (ITI), a tech lobbying group that has publicly urged the administration not to proceed, told Reuters a ban "really threatens to arguably grind (the data center rollout) to a halt." He said many cloud companies have already bought the AI chips for the buildout, and that without transceivers to connect them the chips could sit unused.
Counterpoint Research says China holds two-thirds of the global optical transceiver market, according to Reuters. Zhongji Innolight, which was added to the Pentagon's list of Chinese military-backed companies, and Eoptolink dominate supply, and top US hyperscalers are among their customers. US-based Coherent and Lumentum make competing technology but lack the scale to replace the Chinese vendors, according to a report by the Foundation for American Innovation that Reuters cited. Voltgrid reported earlier on Marvell's deal for Lumentum, a sign of how much strategic weight the laser supply chain now carries.
Network World, reporting on the August story, quoted analysts who expect a "new models only" framing that would protect the installed base while restricting the next generation of products. It also relayed Reuters' account that officials hoped to publish and implement the measure this year, and that the ban could still be modified or shelved.
Morgan Stanley said in an October client note that the administration was considering barring Chinese transceivers capable of 3.2 terabits of data per second, whose production is not expected to ramp up until 2028, with widespread installation expected in 2029. Reuters said such a threshold could avoid antagonizing US companies and Beijing while giving US optical makers time to expand output. Two of its sources said the 3.2 terabit threshold is under consideration.
If that threshold holds, the pressure would fall on the next hardware generation, when buyers would need non-Chinese supply at volume. That is Voltgrid's reading of the reported figures, not FCC text.
The FCC has not addressed the optical transceiver issue publicly, and no rule text, threshold or date has been published. Microsoft's lobbying rests on three unnamed sources, and Microsoft has not commented. Lawmakers may move first: in September a bipartisan group in the US Congress introduced legislation to bar the federal government from equipping sensitive government systems with Chinese-made optical transceivers, Reuters reported. ITI had already written to the FCC on Aug. 13 urging it to refrain from adding optical transceivers to a trade blacklist.
