Microsoft urges Trump administration to halt Chinese optical transceiver ban

Microsoft and other companies and trade groups have urged the Trump administration to stop plans to ban imports from China of optical transceivers, a key component used in AI data centres, according to three people familiar with the situation.

Reuters reported in August that the administration wants to ban US imports of new models of Chinese optical transceivers. Officials are concerned the devices could be used by Beijing to steal data, install malware or disrupt service at US data centres.

Microsoft has 35 data centres under construction in the United States and another 134 planned, according to Cleanview, a market intelligence company that tracks data centre development. Some data centres need millions of optical transceivers to connect servers, routers and switches.

The company is part of a group arguing that a ban could irreparably damage the US advantage over China in the AI race by further slowing data centre rollout. Microsoft was among a handful of firms that met with officials from the White House Office of Science and Technology Policy and the National Security Council weeks after the Reuters report to highlight supply chain challenges.

John Miller, executive vice president of policy and general counsel of the Information Technology Industry Council, said the ban threatens to arguably grind the data centre rollout to a halt. He noted many cloud companies have already purchased the AI chips needed for the buildout.

The Federal Communications Commission, which oversees the US telecom industry, is working on the ban. The previously unreported efforts show how the agency's deliberations have raised alarms in an industry racing to meet surging demand for cloud and AI services.