U.S. lawmakers move to bar Chinese optical transceivers from sensitive federal systems

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US ban on Chinese optical transceivers

Highlights

A bipartisan group of U.S. lawmakers introduced a bill to bar Chinese-made optical transceivers from federal systems, targeting Eoptolink and Zhongji Innolight, with authority to expand the list.
U.S. technology industry groups, including the Information Technology Industry Council, warn that cutting off Chinese vendors could slow AI infrastructure buildouts and risk U.S. cloud deployment leadership.
U.S. rivals Coherent and Lumentum lack the scale to replace Chinese manufacturers, and the legislation would give the government five years to comply with the new restrictions.

Proposed restrictions target AI data hardware

As reported by Reuters, a bipartisan group of U.S. lawmakers introduces legislation on Friday to stop the federal government from using Chinese-made optical transceivers in sensitive systems. The proposal specifically applies to products made by China's Eoptolink and Zhongji Innolight, and it allows the Secretaries of Commerce and Defense to add more companies later.

Optical transceivers transmit data over fiber-optic cables and are a core component of AI data center networks. Some facilities require millions of the devices, making them an important part of the broader U.S. AI infrastructure buildout.

Supporters of the bill say the components could be used by Beijing to disrupt access to U.S. AI tools and cloud services. Senator Dave McCormick says the U.S. should not rely on China for technologies essential to national security, while Senator John Cornyn says critical government communication and information systems must remain free of foreign interference.

Industry warns of supply risks and slower deployment

Chinese suppliers currently hold a strong position in the optical transceiver market, adding commercial weight to the proposed restriction. Innolight, which is already on a Pentagon list of alleged Chinese military-backed companies, Eoptolink and the Chinese Embassy do not immediately respond to requests for comment.

Parts of the U.S. technology industry argue that cutting off Chinese vendors could slow domestic AI infrastructure expansion and hand an advantage to China while large cloud operators look for alternative suppliers. The Information Technology Industry Council says in an August 13 letter to the FCC that the agency should refrain from adding optical transceivers to a trade blacklist because supply disruptions could affect data center deployment and U.S. AI leadership.

U.S.-based Coherent and Lumentum sell competing products, but a report from the Foundation for American Innovation says they do not yet have the scale to replace Chinese manufacturers. If approved, the legislation gives the government five years to comply.

In our earlier article on Solidigm weighing a potential IPO, we explained how investor demand for AI infrastructure plays is lifting valuations for companies that supply data center hardware. We noted that Solidigm’s enterprise SSD and NAND storage products are positioned to benefit from AI-driven spending on cloud and server infrastructure, underscoring how critical components across the data center stack are becoming strategic assets.

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