Inside the quiet, humming halls of datacenters around the world, the next front in the US-China tech rivalry is emerging. The Trump administration is working on a new barrier—blocking US imports of next-generation optical transceivers made in China, according to four sources close to the process. These tiny but powerful devices allow data to zip at lightning speed through fiber-optic cables, forming the backbone of artificial intelligence infrastructure.
The Federal Communications Commission (FCC) is reportedly drafting a rule to bar the entry of new Chinese-built models, with a target publication date this year. While the plan is not yet final, it reflects a growing effort to curb China’s expanding influence in AI, robotics, and semiconductors. The US has long been home to tech giants like OpenAI, Anthropic, and Google, but China’s fast advancement in AI development and datacenter building has stirred alarm—and urgency—in Washington.
Data Risks and Supply Chain Fears
The concern over Chinese components stems from fears that they could be used to steal data, implant malware, or disrupt US services if embedded in American infrastructure. These risks have grown as Chinese firms capture a majority of the global optical transceiver market. US companies are investing trillions into AI infrastructure, but construction lags, giving China a chance to close the gap with its own rapid datacenter expansion.
Zhongji Innolight, one of the largest manufacturers of transceivers and a recent Pentagon target, stands to be hit hardest by any such ban. The Trump administration has also been considering restrictions on open-source AI models from Chinese developers, citing similar supply chain and national security concerns. Treasury Secretary Scott Bessent has even floated sanctions over alleged data and IP theft.
China’s embassy in Washington has pushed back, urging the US to listen to business interests and stop what it calls baseless smears against Chinese companies. It added that China is ready to retaliate against any action that damages its interests. Officials in the Trump administration have drawn lessons from Huawei, which became a deep-rooted part of US networks before removal efforts proved complex and costly.
The FCC has already banned advanced Chinese humanoid robots in the US and is now circling datacenter components. This shift highlights a growing belief among US officials that Chinese influence in AI infrastructure could undermine US tech leadership. As the administration pushes forward with new barriers, the battle over data, security, and AI control is accelerating.