WASHINGTON, November 10, 2026 — Microsoft has urged the Trump administration not to impose a proposed ban on new Chinese-made optical transceivers used in artificial intelligence data centers, warning that restrictions could disrupt the supply chain needed to expand US computing capacity.
Optical transceivers connect servers, routers and switches through fibre-optic cables, allowing large volumes of data to move rapidly inside data centers. The Trump administration has been considering restrictions because of concerns that Chinese-made equipment could be used to steal information, install malicious software or disrupt services.
Microsoft and other technology companies and industry groups have argued that domestic manufacturers do not yet have enough capacity to replace Chinese suppliers at the scale required. Some data centers need millions of transceivers, and the components are essential to making expensive AI processors function as part of a connected system.
Microsoft has 35 data centers under construction in the United States and another 134 planned, according to a market intelligence tracker cited by Reuters. The company and other firms met with White House officials to explain the supply challenges they believe a ban could create.
The Federal Communications Commission is working on the proposed restriction, but no final decision has been announced. A possible compromise under discussion would target only higher-capacity products expected to enter production later, giving US suppliers time to increase output while addressing national-security concerns.
China’s embassy in Washington criticised what it called an excessive use of national-security arguments to suppress Chinese companies. The dispute reflects a wider challenge for US policymakers: reducing dependence on Chinese technology while maintaining the speed and scale of domestic AI infrastructure development.
The proposal remains under consideration. Any eventual rule would need to balance security risks against the possibility of higher costs, construction delays and a slower expansion of US data-center capacity.