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FCC proposes import ban on Chinese optical transceivers — blockade targets key AI interconnects as China holds 56% global market share
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The FCC is proposing to add Chinese-made optical transceivers to the Secure Networks Act's restricted equipment list, targeting a component category where China holds 56% of projected 2026 global manufacturing capacity and that is critical to next-generation AI data center interconnects.
This ban would restrict access to the optical interconnect technologies, co-packaged optics and near-packaged optics, that hyperscalers depend on to replace copper wiring bottlenecks in AI infrastructure. The supply chain risk extends beyond manufacturing: China controls roughly 70% of global indium supply, a raw material essential to indium phosphide used in optical transceivers, and already restricted indium exports in 2024.
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The FCC proposal would mark the first time optical transceivers are covered under the Secure Networks Act, with the 'new model' language potentially targeting CPO and NPO technologies while leaving existing designs and contracts intact.
Chinese manufacturers are projected to hold 56% of global optical module manufacturing capacity by 2026, making rapid supply chain decoupling difficult for U.S. hyperscalers.
China restricted indium exports in 2024 and controls approximately 70% of global indium supply, meaning even non-Chinese transceiver manufacturers face upstream material constraints.
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