WASHINGTON, Aug. 4, 2026 — The Trump administration is preparing a new restriction that could prevent U.S. companies from importing new models of certain Chinese-made equipment used in data centers, according to people familiar with the discussions.
The proposed measure is being developed by the Federal Communications Commission (FCC) and would initially focus on optical transceivers, devices that transmit data through fiber-optic cables inside data centers. Officials are reportedly aiming to publish the measure later this year, although the proposal could still be changed or abandoned.
The move comes as the United States seeks to secure the infrastructure supporting the rapid expansion of artificial intelligence. Modern data centers contain highly valuable computing equipment and large volumes of sensitive information, increasing concerns among U.S. officials about vulnerabilities in hardware supply chains.
Security concerns drive proposal
According to sources familiar with the plan, U.S. officials are concerned that equipment supplied by Chinese companies could potentially be used to steal information, introduce malicious software or disrupt data-center operations.
The proposed restrictions reflect a broader Trump administration effort to prevent Chinese technology from becoming deeply embedded in critical U.S. infrastructure before it becomes difficult and expensive to remove.
The FCC has increasingly used its authority to restrict foreign-made technology considered a national-security risk. Recent measures have targeted products including Chinese-linked drones, routers, robots and power inverters.
Chinese manufacturers could face major impact
One company that could be affected is Zhongji Innolight, a major Chinese supplier of optical transceivers. The company has a significant position in the global data-center transceiver market and was added to a Pentagon list of companies alleged to have links to China’s military.
Innolight did not respond to requests for comment, according to Reuters.
Industry data cited in the reporting indicates that Innolight has about 27% of the global data-center transceiver market. Its products are sold extensively outside China, making any U.S. restrictions potentially significant for the wider supply chain.
U.S. cloud companies could face higher costs
A restriction could create opportunities for American suppliers such as Coherent, Lumentum and Applied Optoelectronics, whose shares rose following the report.
However, replacing Chinese suppliers may not be straightforward. U.S. manufacturers currently lack the same production scale in some areas, meaning American cloud providers could face higher equipment costs or supply constraints as they shift toward alternative vendors.
Large technology companies and cloud providers, including Amazon Web Services, could therefore be among those affected if the restrictions are implemented.
Proposal could exempt some foreign suppliers
People familiar with the discussions said the FCC could take an approach similar to its recent restrictions on other foreign technologies.
Under that approach, new models of the targeted equipment could initially be placed under restrictions, while suppliers from countries considered lower-risk could receive exemptions.
The details have not been finalized, and the sources stressed that the proposal remains under development.
Part of a broader U.S.-China technology dispute
The potential data-center restrictions are part of a wider effort by Washington to reduce dependence on Chinese technology in strategically important industries.
The administration has previously taken action against Chinese telecommunications equipment and other technologies, citing national-security concerns. The approach echoes the U.S. government’s long-running restrictions on Huawei, whose equipment became deeply integrated into telecommunications networks before Washington imposed extensive sanctions.
U.S. officials and China hawks within the administration are concerned about repeating that experience with data-center infrastructure, particularly as AI investment accelerates.
China warns against further restrictions
China’s embassy in Washington criticized the proposed restrictions and urged the United States to avoid targeting Chinese companies.
Beijing has warned that it could take measures in response to actions that materially harm Chinese interests.
The dispute comes despite periods of reduced tension in the broader U.S.-China trade relationship. Earlier this year, the Commerce Department shelved some proposed restrictions on Chinese technology following an improvement in trade relations.
The FCC’s actions, however, indicate that national-security restrictions on technology may continue independently of broader trade negotiations.
What happens next?
The FCC is expected to continue working on the proposed restrictions, with officials potentially seeking to publish the measure before the end of 2026.
For now, no final ban has been announced, and the proposal could still be modified or dropped.
If adopted, the policy would mark another significant step by Washington to limit Chinese participation in the U.S. technology supply chain—this time targeting a relatively small but strategically important component of the infrastructure powering the country’s rapidly expanding AI industry.
