Microsoft has been pressing the Trump administration to halt plans to bar imports of a key component used in artificial intelligence data centres, three people familiar with the situation told Reuters, in lobbying that has not previously been reported.
The component at issue is the optical transceiver, which carries data along fibre-optic cables at the speed of light inside data centres. Reuters reported in August that the administration wants to ban US imports of new models of Chinese transceivers, amid concern that Beijing could use them to steal data, install malware or disrupt service at American data centres.
Microsoft has 35 data centres under construction in the United States and another 134 planned, according to Cleanview, a market intelligence company that tracks data-centre development. It is one of a group of companies and trade groups arguing that a ban could irreparably damage the US edge over China in the AI race by slowing the data-centre rollout still further.
The company 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 a ban would create, two of the sources said.
“It really threatens to arguably grind [the data centre rollout] to a halt,” said John Miller, general counsel of the Information Technology Industry Council, a tech lobbying group that has publicly urged the administration not to proceed. He said many cloud companies had already bought the AI chips needed for the buildout, and that without transceivers to connect them together those chips “could just sit there waiting around un-utilised”. Some data centres need millions of optical transceivers to link servers, routers and switches.
The Federal Communications Commission, which oversees the US telecoms industry, is working on the ban. China holds about two-thirds of the global market for optical transceivers, according to Counterpoint Research. Chinese firms such as Eoptolink and Zhongji Innolight — the latter is on the Pentagon’s list of Chinese military-backed companies — dominate global supply and count top American hyperscalers among their customers. US-based Coherent and Lumentum make competing technology but lack the scale to replace Chinese vendors, according to a report by the Foundation for American Innovation.
The industry group sent a letter to the FCC on 13 August calling on the regulator to refrain from adding optical transceivers to a trade blacklist, warning of the “potential effects that supply disruptions could have on data center deployment and US AI leadership”.
Morgan Stanley said in an October client note that the administration was considering barring Chinese transceivers capable of handling 3.2 terabits of data per second, whose production is not expected to ramp up until 2028, with widespread installation expected in 2029. Such a threshold could avoid antagonising US companies and Beijing while giving American optical firms time to expand production. The FCC has not addressed the issue publicly, but two of the sources said the 3.2 terabit threshold is under consideration.
Lawmakers may not want to wait. In September, a bipartisan group of US lawmakers introduced legislation to bar the federal government from equipping sensitive government systems with Chinese-made optical transceivers.
Microsoft declined to comment. The White House, the FCC and the Chinese embassy in Washington did not immediately respond to requests for comment. This account rests on Reuters’ reporting and three unnamed sources, and the administration’s plans have not been confirmed publicly.
Sources: Reuters — https://www.reuters.com/business/media-telecom/microsoft-presses-trump-scuttle-expected-ban-chinese-data-center-technology-2026-11-10/
