Why the FCC Should Add Chinese-Made Optical Transceivers to the Covered List

# The risk: a hidden supply chain inside AI data centers

Transceivers are not passive components. Modern units include processors and proprietary firmware that can be updated after installation. Firmware compromise could degrade or disable optical links and disrupt data-center operations. That's a different risk profile than a simple cable or connector.

# Why China matters here

China-based manufacturers supply a large share of global optical-transceiver units—about two-thirds worldwide—according to the article. Named suppliers include Zhongji Innolight (designated Chinese Military Company) and Eoptolink. Even when American alternatives exist, hyperscalers have become dependent on Chinese supply for volume and cost reasons.

That dependency creates three core risks: disrupted supply in a crisis, withheld support or spare parts, and the potential for firmware-based interference in critical links. The article points to recent attacks on cloud infrastructure—specifically March strikes on AWS data centers in the UAE and damage in Bahrain—as evidence that adversaries understand the strategic value of cloud and data-center infrastructure.

# What the FCC can and should do

The FCC has used this tool before. When it added drones, billions flowed into U.S. drone manufacturing and created jobs, per FCC Chairman Brendan Carr. When the agency moved against Huawei in wireless networks, the U.S. launched a $5 billion rip-and-replace program to remove and replace equipment.

# Can U.S. industry respond?

U.S. and Western suppliers are already scaling capacity. The article names Applied Optoelectronics, Coherent, and Lumentum as companies expanding manufacturing capacity in Texas and North Carolina. Western suppliers can't replace Chinese volume overnight, but a covered-list action would create clearer demand signals and likely accelerate further onshoring and capacity expansion.

The FCC can manage the transition through conditional approvals and phased timelines. The agency has used those tools before to allow companies to pace shifts while ensuring plans to onshore are credible.

# Trade-offs and industry pushback

Some companies will object on cost and operational-disruption grounds. The article frames those complaints as predictable but argues they must be weighed against national-security exposure. Businesses that prioritize short-term cost savings over strategic diversification create incentives for foreign subsidization and market capture.

# Bottom line

Optical transceivers are a small but critical part of data-center stacks. Because they contain updatable firmware, and because China dominates their supply, the article recommends the FCC add Chinese-made transceivers to the covered list to reduce strategic dependency, accelerate trusted supply expansion, and protect military and commercial reliance on AI-capable cloud infrastructure.