On August 4th, Reuters reported that the Federal Communications Commission (FCC), which oversees the U.S. telecommunications industry, is formulating measures to ban the import of certain types of optical modules from China. These optical modules are used for high-speed fiber optic data transmission within data centers.
American officials hope to announce and implement such a ban within this year. The reason for this is that there are baseless accusations that Chinese companies might steal data, install malware, or interfere with the operation of data centers using related equipment. These data centers are equipped with chips used for training and running AI models.
However, people familiar with the matter said that the FCC may still modify or put aside the restrictions.
Reuters believes this is one of the latest measures taken by the Trump administration to restrict Chinese technology from infiltrating America's high-tech industries, with the aim of curbing such activities before related products are deeply integrated into America's supply chain.
American Washington consulting firm Beacon Global Strategies’ artificial intelligence policy expert Divyansh Kaushik added: “There is indeed a risk associated with optical modules. As the scale of data center construction continues to expand, it is important to ensure the safety of the data center supply chain from the very beginning.”
Regarding this, the Chinese Embassy in the United States responded that China urges the United States to 'listen to the objective and rational voices of the business communities of both countries' and 'stop smearing Chinese enterprises and threatening them with sanctions'. The embassy also stated: 'China will take all necessary measures in response to any actions that seriously harm China's interests.'
The hard-line stance towards China within the Trump administration hopes to avoid a repeat of the Huawei incident. Huawei's telecommunications equipment had been deeply integrated into US infrastructure in the early years. Even after facing severe sanctions, the process of removing such equipment has been slow and costly, and it has not yet been completely completed.
If the ban comes into effect, it could impact Zhongji Xuchuang, one of the world’s leading optical module suppliers. In June this year, Zhongji Xuchuang was listed by the U.S. Department of Defense as a company that supports Chinese military forces, which is seen as a signal that the U.S. may further tighten its restrictions.
Regarding this, Zhongji Xuchuang announced that the reasons for listing the company on the list by the U.S. Department of Defense do not conform to objective facts. Zhongji Xuchuang is neither a Chinese military enterprise nor an enterprise engaged in military-civilian integration. The company will communicate effectively based on solid facts and take appropriate measures to protect its interests.
This ban on optical modules could also increase the costs for American cloud service companies like Amazon Cloud Computing, forcing them to turn to American suppliers Coherent and Lumentum.
According to market research firm Counterpoint Research, Zhongji Xuchuang accounts for approximately 27% of the global data center optical transceiver module market, ranking as a leading player in the industry.
A report by the American Innovation Foundation indicates that although Coherent and Lumentum have competitive technologies, their production scale is still insufficient to replace Chinese suppliers.
Previously, the FCC had implemented similar restrictions on drones, routers, robots, and inverters manufactured in China. According to three sources, in line with previous practices, the FCC intends to ban the import of all new types of optical modules manufactured in China, while granting exemptions for products from many non-Chinese suppliers.
In recent years, the U.S. government has been trying to reduce its dependence on Chinese-made equipment, under the pretext of "national security".
In response to the unreasonable actions of the US side, China has firmly counterattacked. A spokesperson for the Ministry of Foreign Affairs stated that China has always been firmly opposed to the US practice of generalizing the concept of national security and creating discriminatory lists under various pretexts, as well as its unreasonable suppression of Chinese enterprises. We urge the US side to correct its wrongful practices and stop its unreasonable suppression of Chinese enterprises. China will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises.
