Politics

Microsoft Reportedly Urges Trump Admin Not To Ban Chinese Data Center Parts

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Microsoft has pressed the Trump administration not to ban Chinese-made parts used in artificial intelligence data centers, Reuters reported Tuesday.

The company is among several firms and trade groups arguing that a ban could slow the data center buildout and hurt America’s lead over China in AI, the outlet reported, citing three people familiar with the situation.

“Any announcements will come directly from the Administration,” an administration official said in a statement to the Daily Caller News Foundation. “Until then, any discussion or reporting about additions to the covered list should be regarded as baseless speculation.”

The Federal Communications Commission (FCC) publishes the Covered List, which names communications equipment and services “deemed to pose an unacceptable risk to the national security of the United States or the security and safety of United States persons.”

The agency is working on the ban, according to Reuters.

The ban would cover new models of Chinese optical transceivers, which send data over fiber-optic cables inside data centers. The concern is that Beijing could use the parts to steal data or disrupt service, according to Reuters.

Microsoft was one of a handful of companies that met in September with officials from the White House Office of Science and Technology Policy and the National Security Council to raise supply chain concerns, according to the outlet. Microsoft declined to comment to both Reuters and the DCNF.

The FCC did not respond to the DCNF’s request for comment.

Cleanview, a firm that follows data center projects, counts 35 Microsoft data centers being built in the U.S. and another 134 on the drawing board, according to Reuters.

“It really threatens to arguably grind (the data center rollout) to a halt,” John Miller, general counsel of the Information Technology Industry Council, a tech lobbying group, told Reuters.

Some data centers use millions of the parts, according to Reuters.

Chinese companies account for two-thirds of worldwide sales of optical transceivers, Reuters reported, citing Counterpoint Research.

American companies Coherent and Lumentum make competing products but cannot yet match the output of Chinese suppliers, Reuters reported, citing a Foundation for American Innovation report.

The FCC has not spoken publicly about the parts. The ban may only cover transceivers that carry 3.2 terabits of data per second, two of the sources told Reuters.

Production of those models is not expected to pick up until 2028, the outlet reported, citing a Morgan Stanley client note.

The Pentagon added InnoLight, a major Chinese manufacturer, to its list of Chinese military companies in June, according to a Sept. 25 release from Republican Pennsylvania Sen. Dave McCormick.

McCormick introduced a bill with Democratic Arizona Sen. Ruben Gallego, Republican Texas Sen. John Cornyn and Democratic Pennsylvania Sen. John Fetterman to keep Chinese-made optical transceivers out of the government systems that handle the most sensitive national security information, the release says. The Senate referred the bill, S. 5548, to the Committee on Homeland Security and Governmental Affairs, its text shows.

“We shouldn’t rely on China for technologies that are essential to our national security,” McCormick said in the release.

“Our reliance on China to produce these transceivers creates a serious national security vulnerability,” Gallego added in the release.

“Critical government communication and information systems must be safe, reliable, and free of any foreign interference, but the use of Chinese technology undermines that mission,” Cornyn said.

The bill would extend an existing limit on federal purchases of semiconductors to cover the parts and would allow waivers, according to the release.

The bill would give suppliers five years to develop sources that comply, according to the release.

Interior Secretary Doug Burgum described data centers as “manufacturing sites” at a Daily Caller event Tuesday.