[News] Microsoft Reportedly Urges U.S. to Drop Proposed Chinese Optical Transceiver Ban Amid AI Supply Concerns

What happened

According to Reuters, citing sources, Microsoft and other technology companies and industry groups are urging the Trump administration to abandon plans to restrict imports of Chinese optical transceivers, which enable high-speed data transmission within data centers. Microsoft was reportedly among several companies that met with officials from the White House Office of Science and Technology Policy and the National Security Council in September to raise concerns about potential supply chain disruptions; it argues the proposed ban could undermine the U.S. lead in AI by slowing data center construction. The Trump administration is considering restrictions on newer Chinese optical transceivers over concerns that Beijing could use them to steal data, install malware, or disrupt U.S. data center operations. Per TrendForce, Chinese suppliers are expected to account for approximately 56% of global contract manufacturing capacity in 2026, with Innolight, Eoptolink, and Cambridge Industries Group collectively representing around 46%; AI data center supply chains remain heavily dependent on China's optical module manufacturing, packaging, and testing capabilities, so broad U.S. restrictions could increase costs and extend lead times. Reuters, citing a report by the Foundation for American Innovation, notes that Coherent and Lumentum offer competing optical transceiver technologies but lack the production scale to fully replace Chinese suppliers. The administration is also reportedly considering a narrower ban targeting Chinese 3.2Tbps optical transceivers, which are expected to enter mass production in 2028 and see wider adoption in 2029, per Reuters citing Morgan Stanley. Another possible exemption would allow Chinese-made transceivers into the U.S. if American companies account for at least 65% of their bill-of-materials value, per Economic Daily News citing Morgan Stanley. All such restrictions remain proposed/under consideration and are not in effect.

Impact and signal

Affected components and suppliers

Source and time

Source: TrendForce · 11/10/2026 · View original source