Microsoft is urging the US government to ban Chinese-made optical transceivers, key parts for AI data centers, because they're worried about spying and data theft.
Microsoft met with officials in September to flag supply-chain challenges and disruptions from a possible ban, as it fears these imports could make US technology infrastructure vulnerable.
Most optical transceivers sourced from China
Microsoft is building dozens of new data centers across the US but most optical transceivers come from Chinese suppliers.
While American companies like Coherent and Lumentum exist, they can't match China's production scale yet.
The Federal Communications Commission is now considering restrictions on high-capacity transceivers to boost security, but industry groups warn this could slow down progress in AI and cloud technology.