Microsoft has pressed the Trump administration to halt plans to bar imports of new Chinese optical transceivers, Reuters reported on November 10, citing three people familiar with the matter. The Microsoft optical transceiver ban would cover a part that carries data over fiber-optic cables inside AI data centers. The Federal Communications Commission is working on the ban, which the administration first raised in August. Microsoft declined to comment on the report. The White House, the FCC and the Chinese embassy did not respond to requests for comment.
Microsoft optical transceiver ban: the supply chain at stake
Optical transceivers convert electrical signals into light and back, letting servers, AI chips and networking equipment exchange large amounts of data at high speed. China holds roughly two-thirds of the global transceiver market, according to Counterpoint Research. The leading Chinese makers are Eoptolink and Zhongji Innolight. US suppliers Coherent and Lumentum do not have the capacity to replace Chinese vendors at the scale required, according to the Foundation for American Innovation. Microsoft has 35 data centers under construction in the US and another 134 planned, according to Cleanview, a market intelligence company that tracks data center development. A Microsoft optical transceiver ban would land on a company in the middle of a large buildout, and on an industry that depends on the same parts.
Microsoft optical transceiver ban: what the FCC is weighing
The administration is weighing a narrower rule that would target future parts instead of the gear sold today. Morgan Stanley said in an October client note that officials are considering barring Chinese transceivers capable of handling 3.2 terabits of data per second. Two sources told Reuters that cutoff is still under review. Hardware makers will not ramp up output of those 3.2-terabit parts until 2028, with wide installation expected in 2029. The FCC has not addressed the optical transceiver issue in public, and no rule text, threshold or date has been published. The Microsoft optical transceiver ban remains a proposal, not a rule, and it would apply to imports rather than to parts already installed.
Industry groups warn of delays
Microsoft was one of a handful of firms that met officials from the White House Office of Science and Technology Policy and the National Security Council weeks after the August report to flag the supply chain problems a ban would present, two of the sources said. The Information Technology Industry Council, a tech lobbying group, has publicly urged the administration not to proceed. Its general counsel, John Miller, told Reuters the plan “really threatens to arguably grind (the data center rollout) to a halt.” On August 13, the council sent a letter to the FCC asking it to refrain from adding optical transceivers to a trade blacklist. Other companies and trade groups have pressed the administration along the same lines, and the Microsoft optical transceiver ban is opposed by firms that say a cutoff would leave AI chips idle while they wait for parts.
The case for the ban rests on national security. US officials worry Beijing could use Chinese-made transceivers to steal data, install malware or disrupt service at American data centers. The concern covers new models of the part, which move data between servers at the speed of light. Microsoft and its peers say a ban would slow the buildout of US digital infrastructure and weaken the country’s ability to compete with China in AI. A Microsoft optical transceiver ban sits between those two claims: a security risk on one side and a supply chain with few substitutes on the other.
Microsoft operates more than 500 data centers across 34 countries. The company has not said what it would do if the ban goes ahead, and the FCC has not said when it will decide. For now, the Microsoft optical transceiver ban is a plan under discussion, and the companies that would have to live with it are making their case before any rule is written.