Microsoft is lobbying the White House against a possible FCC ban on Chinese optical transceivers, the small modules that link AI chips inside data centers.
The company, which is building 35 data centers around the US and has plans for 134 more, has reportedly met with the White House Office of Science and Technology Policy and the National Security Council. It is working alongside the Information Technology Industry Council, a trade group. ITI's John Miller said the ban "really threatens to arguably grind (the data center rollout) to a halt," adding that chips could "just sit there waiting around unutilized" without transceivers to connect them.
A transceiver converts electrical signals into light so data can travel over fiber. Data centers favor them over copper for AI work because they are faster, lower-latency, and use less power and give off less heat.
The arithmetic is the problem. Chinese companies supply 66% of the global market, so a ban would more than halve available supply, in an industry already short on parts. The security worry is that Beijing could compromise some modules to steal data, install malware, or remotely disrupt American facilities. That is the same logic the FCC applied when it barred Huawei from US telecom networks.
The Huawei comparison breaks down on alternatives. Telecom had established rivals to Huawei. Only two US-based companies, Coherent and Lumentum, make the transceivers data centers need, and neither has the scale to cover the gap if a ban took effect today.
The Trump administration has floated a compromise: ban only Chinese transceivers capable of 3.2 terabits per second. That technology exists, but production is not expected to expand until 2028, with installation starting in 2029. The idea is to give American makers time to ramp up. It is still under consideration.
It is a tidy deal for everyone but the stated security goal. The security concern, as described, covers compromised modules in general, yet the cutoff would restrict only the fastest ones. The administration has not explained how a speed threshold answers the risk of data theft or malware, and until it does, the proposal reads more as a supply-chain bet than a security measure.