Trump Administration Bans Chinese Data Center Devices to Secure AI Infrastructure

EXCLUSIVE: Trump administration drafting ban on Chinese data center devices, sources say

WASHINGTON, Aug 4 (Reuters) - The Trump administration is drafting a ban on U.S. imports of new models of Chinese data center components, four people familiar with the matter told Reuters, as it seeks to protect the infrastructure that undergirds the AI boom. The Federal Communications Commission, which oversees the U.S. telecom industry, is working on the measure to bar imports of new Chinese optical transceivers, which allow data to travel over fiber-optic cables at the speed of light within data centers. Officials hope to publish it this year, when it would take effect. The move, not previously reported, aims to prevent Chinese firms from stealing data, installing malware or disrupting service at U.S. data centers, which house the chips to train and run AI models. The FCC could still modify or shelve the restriction, the sources stressed, speaking on condition of anonymity to discuss sensitive matters. But it is the latest example of the Trump administration trying to limit Chinese technological incursions into cutting-edge U.S. industries before they become embedded in the ⁠supply chain. "Transceivers definitely pose a risk," said Divyansh Kaushik, an AI policy expert at Washington, D.C., advisory firm Beacon Global Strategies. "As the data center buildout scales up, you want to make sure the data center supply chain is secure from the get-go," he added. CHINA WILL RESPOND IF NECESSARY: EMBASSY The White House and the FCC did not respond to requests for comment. The Chinese embassy in Washington said Beijing urges the United States to "heed the objective and rational voices of the business communities in both countries" and "stop smearing Chinese companies and threatening them with sanctions." "China will take all necessary measures in response to any action that causes material harm to its interests," it added. China hawks in the administration are keen to avoid another situation like Huawei, where telecom equipment made by the heavily sanctioned Chinese firm was so deeply embedded in U.S. infrastructure that efforts to remove it were slow, expensive and incomplete. The FCC has historically been independent, but in June the U.S. Supreme Court backed President Donald Trump's firing of a Democratic Federal Trade Commission member, expanding his powers over the government, including certain regulatory agencies. A U.S. ban on new models of Chinese data center ⁠devices would likely hit China's Zhongji Innolight (300308.SZ), opens new tab, one of the biggest global sellers of transceivers, which was added to the Pentagon's list of alleged Chinese military-backed companies in June. The list can be a harbinger of tougher action. Innolight did not respond to requests for comment. A ban could also raise costs for American cloud firms such as Amazon Web Services (AMZN.O), opens new tab, as it may force them to transition to other producers such as U.S.-based Coherent (COHR.N), opens new tab and Lumentum (LITE.O), opens new tab, which stand to benefit from the measure. Innolight has a leading 27% share of the global data center transceiver market, according to Counterpoint Research. Coherent and Lumentum sell competitive technology but ⁠lack the scale to replace Chinese vendors, according to a report by the Foundation for American Innovation. Innolight generates 90% of its revenue outside China, the report added. AWS, Coherent and Lumentum did not respond to requests for comment. The FCC has imposed similar curbs on Chinese drones, routers, robots and inverters, as first reported by Reuters. In line with those restrictions, the agency would ban all imports of new transceiver models and then exempt many ⁠non-Chinese suppliers from the restrictions, three of the sources said. Trump drew attention during his first term to alleged intellectual property theft by Chinese firms and state-sponsored spying by Huawei, which the company denies. But Trump has taken a less aggressive approach during his second term after Beijing's use of export controls on rare earth minerals last year. Reuters reported in February that the Commerce Department, which ⁠has tools to police the tech supply chain for perceived threats from China, shelved a group of import restrictions on China -- including one targeting Chinese data center equipment -- following a trade war détente last October. But the FCC has stepped in, announcing the drone and router bans in December and March, respectively, via its so-called Covered List, created by Congress to bar future equipment sales by foreign companies whose products pose national security risks. Moves against Chinese inverters and robots followed last week. Reporting by Alexandra Alper Editing by Rod Nickel Our Standards: The Thomson Reuters Trust Principles., opens new tab

US is drafting a ban on Chinese devices in data centres

The move would extend a fast-widening campaign to keep Chinese hardware out of the infrastructure behind the American AI buildout. The Trump administration wants Chinese hardware out of American data centres. Officials are drafting a ban on Chinese-made devices used in data centres, according to Reuters, the latest move to wall off the infrastructure behind the US AI buildout from Chinese technology. The draft extends a campaign that has been widening fast. It follows a ban, unveiled days earlier, on new Chinese humanoid robots and power inverters, both cast as risks to critical infrastructure. That earlier move set the template. US regulators added foreign robots and inverters to a restricted list over fears that Chinese-controlled devices could become supply-chain vulnerabilities or remote-access points. Data centres are the natural next target. They are the physical core of the AI economy, packed with servers, networking gear, and power equipment, and Washington increasingly treats any Chinese component inside them as a liability. The logic is control over the stack. If AI is a strategic asset, the argument runs, the machines that train and serve it should not depend on parts made by a rival that could, in theory, disrupt or surveil them. Enforcement is the hard part. Bans of this kind are routinely undercut by resellers, relabelled parts, and subsidiaries, and closing those loopholes is as much of the drafting work as naming the devices. The gear most likely in the frame is the connective tissue of a data centre: networking switches, servers, storage, and the management chips inside them. Any of these could, in theory, carry a hidden path back to a foreign vendor. Untangling it will not be instant. American operators still lean on Chinese components in places, and some networking and power equipment has few non-Chinese equivalents at the price and volume the buildout demands. Washington has also been nudging allies to follow. Britain and others have weighed emulating its curbs, which would widen the market that Chinese vendors lose at a stroke. Beijing has not taken the pressure quietly. China has threatened retaliation over the US robot ban, including leverage over the rare-earth minerals that Western manufacturers cannot easily source elsewhere. The two sides are now trading restrictions in a familiar rhythm. Each ban invites a counter-ban, and a technology supply chain that took decades to knit together is being unpicked category by category. The through-line is the AI race. The administration casts hardware decoupling as protecting the American AI buildout, the same rationale it uses to justify export controls on chips flowing the other way. Hardware is only half of it. The administration has also weighed restrictions on Chinese AI models themselves, a move startups urged it not to make, warning that cutting off cheap open-weight models would hurt American developers more than China. Bans carry a bill. Ripping Chinese devices out of data centres, or barring cheaper Chinese gear, raises costs for the operators racing to build capacity, a tension the industry has flagged even as it accepts the security case. China, for its part, is building its own way around the same problem. A Chinese lab recently stood up a large data centre with no Nvidia inside, a sign of how completely both countries now want domestic control of the AI stack. There is a cost to moving this fast, too. Rules drafted in a hurry can sweep in gear with no viable non-Chinese substitute, leaving operators to choose between breaking the rules and stalling their builds. The rules would ripple well beyond the US. Vendors barred from American data centres lose one of the world's largest markets, and any move by allies to follow multiplies the effect far past a single country. The draft is not final, and the exact list of banned devices is still being written. But the direction is unmistakable: on both sides of the Pacific, the machinery of artificial intelligence is becoming something each superpower insists on building for itself.

Exclusive-Trump Administration Drafting Ban on Chinese Data Center Devices, Sources Say

WASHINGTON, Aug 4 (Reuters) - The Trump administration is drafting a ban on U.S. imports of new models ⁠of ⁠Chinese data center components, four people familiar with the ⁠matter told Reuters, as it seeks to protect the infrastructure that undergirds the AI boom. The Federal Communications Commission, which oversees the U.S. telecom industry, is working on the measure to bar imports of new Chinese optical transceivers, which allow data to travel over fiber-optic cables at the speed of light within data centers. Officials hope to publish it this year, when it would take effect. The move, not previously reported, aims to prevent Chinese firms from stealing data, installing malware or disrupting service at U.S. data centers, which house the chips to train and run AI ⁠models. The FCC could still ⁠modify or shelve the restriction, the sources stressed, speaking on condition of anonymity to discuss sensitive matters. But it is the latest example of the Trump administration trying to limit Chinese technological incursions into cutting-edge U.S. industries before they become embedded in the supply chain. "Transceivers definitely pose a risk," said Divyansh Kaushik, an AI policy expert at Washington, D.C., advisory firm Beacon Global Strategies. "As the data center buildout scales up, you want to make sure the data center supply chain is secure from the get-go," he added. CHINA WILL RESPOND IF NECESSARY: EMBASSY The White House and the FCC did not respond to requests for comment. The Chinese embassy in Washington said Beijing urges the United States to "heed ⁠the ⁠objective and rational voices of the business ⁠communities in both countries" and "stop smearing Chinese companies and threatening them with sanctions." "China will take all necessary measures in response to any action that causes material harm to its interests," it added. China hawks in the administration are keen to avoid another ⁠situation like Huawei, where telecom equipment made by the heavily sanctioned Chinese firm was so deeply embedded in U.S. infrastructure that efforts to remove it were slow, expensive and incomplete. The FCC has historically been independent, but in June the U.S. Supreme Court backed President Donald Trump's firing of a Democratic Federal Trade Commission member, expanding his powers over the government, including certain regulatory agencies. A U.S. ban on new models of Chinese data center devices would likely hit China's Zhongji Innolight, one of the biggest global sellers of transceivers, which was added to the Pentagon's list of alleged Chinese military-backed ⁠companies in June. The list can be a harbinger of tougher action. Innolight did not respond to requests for comment. A ban could ⁠also raise costs for American cloud firms such as Amazon Web Services, as it may force them to transition to other producers such as U.S.-based Coherent and Lumentum, which stand to benefit from the measure. Innolight has a leading 27% share of the global data center transceiver market, according to Counterpoint Research. Coherent and Lumentum sell competitive technology but lack the scale to replace Chinese vendors, according to a report by the Foundation for American Innovation. Innolight generates 90% of its revenue outside China, the report added. AWS, Coherent and Lumentum did not respond to requests for comment. The FCC has imposed similar curbs on Chinese drones, routers, robots and inverters, as first reported by Reuters. In line with those restrictions, the agency would ban all imports of new transceiver models and then exempt many non-Chinese suppliers from the restrictions, three of the sources said. Trump drew attention during his first term to alleged intellectual property theft by Chinese firms and state-sponsored spying by Huawei, which the company denies. But ⁠Trump has taken a less aggressive approach during his second term after Beijing's use of export controls on rare earth minerals last year. Reuters reported in February that the Commerce Department, which has tools to police the tech supply chain for perceived threats from China, shelved a group of import restrictions on China -- including one targeting Chinese data center equipment -- following a trade war détente last October. But the FCC has stepped in, announcing the drone and router bans in December and March, respectively, via its so-called Covered List, created by Congress to bar future equipment sales by foreign companies whose products pose national security risks. Moves against Chinese inverters and robots followed last week. (Reporting by Alexandra AlperEditing by Rod Nickel)

Trump administration drafting ban on Chinese data center devices, sources say

The Trump administration is drafting a ban on new Chinese data center component imports. This measure aims to protect critical infrastructure underpinning the AI boom. Officials hope to publish the restriction this year, taking effect soon after. China has stated it will respond to any actions harming its interests. This move follows similar curbs on Chinese drones and routers. The Trump administration is drafting a ban on U.S. imports of new models of Chinese data center components, four people familiar with the matter told Reuters, as it seeks to protect the infrastructure that undergirds the AI boom. The Federal Communications Commission, which oversees the U.S. telecom industry, is working on the measure to bar imports of new Chinese optical transceivers, which allow data to travel over fiber-optic cables at the speed of light within data centers. Officials hope to publish it this year, when it would take effect. The move, not previously reported, aims to prevent Chinese firms from stealing data, installing malware or disrupting service at U.S. data centers, which house the chips to train and run AI models. The FCC could still ⁠modify or ⁠shelve the restriction, the sources stressed, speaking on condition of anonymity to discuss sensitive matters. But it is the latest example of the Trump administration trying to limit Chinese technological incursions into cutting-edge U.S. industries before they become embedded in the supply chain. "Transceivers definitely pose a risk," said Divyansh Kaushik, an AI policy expert at Washington, D.C., advisory firm Beacon Global Strategies. "As the data center buildout scales up, you want to make sure the data center supply chain is secure from the get-go," he added. CHINA WILL RESPOND IF NECESSARY: EMBASSY The White House and the FCC did not respond to requests for comment. The Chinese embassy in Washington said Beijing urges the United States to "heed the objective and rational voices of the business communities in both countries" and "stop smearing Chinese companies and threatening them with sanctions." "China will take ⁠all necessary measures in response to any action that causes material harm to its interests," it added. China hawks in the administration are keen to avoid another situation like Huawei, where telecom equipment made by the heavily sanctioned Chinese firm was so deeply embedded in U.S. infrastructure that efforts to remove ⁠it were slow, expensive and incomplete. The FCC has historically been independent, but in June the U.S. Supreme Court backed President Donald Trump's firing of a Democratic Federal Trade Commission member, expanding his powers over the government, including certain regulatory agencies. A U.S. ban on new models of Chinese data center devices would likely hit China's Zhongji Innolight, one of the biggest global sellers of transceivers, which was added to the Pentagon's list of alleged Chinese military-backed companies in June. The list can be a harbinger of tougher action. Innolight did not respond to requests for comment. A ban could also raise costs for American cloud firms such as Amazon Web Services, as it may force them to transition to other producers such as U.S.-based Coherent and Lumentum, which stand to benefit from the measure. Innolight has a leading 27% share of the global data center transceiver market, according to Counterpoint Research. Coherent and Lumentum sell competitive technology but lack the scale to replace Chinese vendors, according to a report by the Foundation for American Innovation. Innolight generates 90% of its revenue outside China, the report added. AWS, Coherent and Lumentum did not respond to requests for comment. The FCC has imposed similar curbs on ⁠Chinese drones, routers, robots and inverters, as first reported by Reuters. In line with those restrictions, the agency would ban all imports of new transceiver models and then exempt many non-Chinese suppliers from the restrictions, three of the sources said. Trump drew attention during his first term to alleged intellectual property theft by Chinese firms and state-sponsored spying by Huawei, which the company denies. But Trump has taken a less aggressive approach during his second term after Beijing's use of export controls on rare earth minerals last year. Reuters reported in February that the Commerce Department, which has tools to police the tech supply chain for perceived threats from China, shelved a group of import restrictions on China - including one targeting Chinese data center equipment - following a trade war detente last October. But the FCC has stepped in, announcing the drone and router bans in December and March, respectively, via its so-called Covered List, created by Congress to bar future equipment sales by foreign companies whose products pose national security risks. Moves against Chinese inverters and robots followed last week.