Microsoft and the Information Technology Industry Council have lobbied against a potential FCC ban on Chinese optical transceivers for AI data centers, according to Reuters. The company met with the White House Office of Science and Technology Policy and the National Security Council as the FCC considers restricting imports. ITI Executive Vice President of Policy and General Counsel John Miller stated the ban threatens to grind data center rollout to a halt. The FCC is evaluating the restriction due to concerns that Chinese-supplied transceivers could be compromised by Beijing for data theft, malware installation, or remote disruption of American data centers.
Microsoft and ITI Lobby Against FCC Optical Transceiver Ban
Microsoft, which is building 35 data centers around the U.S. and has plans for 134 more, has met with the White House Office of Science and Technology Policy and the National Security Council as the FCC considers an import ban on Chinese optical transceivers. John Miller, ITI Executive Vice President of Policy and General Counsel, said the ban "really threatens to arguably grind (the data center rollout) to a halt." Miller added that AI chips "without optical transceivers, literally could just sit there waiting around unutilized until you actually have the transceivers to essentially connect them together."
Chinese Companies Hold 66% of Global Optical Transceiver Market
Chinese companies currently supply 66% of the global market for optical transceivers. Optical transceivers are modules plugged into hardware that convert electrical signals into light signals, allowing data transmission as light pulses across fiber optics. Data centers increasingly use optical transceivers and fiber optics to transmit data between AI GPUs and server racks. Banning Chinese suppliers from the U.S. market would more than halve the available supply. Only two U.S.-based companies produce optical transceivers for data centers: Coherent and Lumentum. These firms do not have the scale to make up for the shortfall if the FCC bans Chinese imports.
FCC Cites Security Concerns Over Chinese Data Center Equipment
The FCC is considering the restriction due to concerns that some Chinese transceivers could be compromised by Beijing. Potential risks include data theft, malware installation, or remote disruption of American data centers. The proposed ban follows the FCC's previous decision to ban Huawei from the U.S. telecommunications network. Unlike Huawei, which had many established competitors in telecommunications hardware, the optical transceiver market has limited U.S.-based production capacity.
Trump Administration Proposes 3.2 Tbps Threshold Compromise
One compromise floated by the Trump administration would ban only Chinese optical transceivers capable of hitting 3.2 terabits per second. While this technology already exists, its production is not expected to expand until 2028, with installation not beginning until 2029. This timeline would give American producers time to ramp up their own output. The suggestion is still under consideration.
FAQ
What did Microsoft lobby against regarding Chinese optical transceivers?
Microsoft lobbied against a potential FCC ban on Chinese optical transceivers for AI data centers. The company met with the White House Office of Science and Technology Policy and the National Security Council as the FCC considers restricting imports.
Why is the FCC considering a ban on Chinese optical transceivers?
The FCC is considering the restriction due to concerns that Chinese transceivers could be compromised by Beijing for data theft, malware installation, or remote disruption of American data centers.
What compromise has the Trump administration proposed for the optical transceiver ban?
The Trump administration floated a compromise that would ban only Chinese optical transceivers capable of hitting 3.2 terabits per second. Production of this technology is not expected to expand until 2028, with installation beginning in 2029.
