FCC Finalises Equipment Rules, Easing Fears Over Chinese Optical Transceivers

The US Federal Communications Commission (FCC) has published its final decision on updates to its equipment authorisation rules, easing market anxiety over potential bans on Chinese optical transceivers.

The rule, adopted in July and finalised on Friday, tightens authorisation requirements for devices containing certain hardware components made by entities on the Covered List – a US blacklist of foreign technology equipment and service providers deemed to pose an unacceptable risk to national security.

Optical transceivers, devices located within data centres that facilitate the transmission of data, were not targeted by the ruling, which calmed market speculation after a Reuters report in August said that the Trump administration was drafting measures to block new Chinese models from entering the US market this year.

Zhongji Innolight, a leading producer of optical transceivers used in data centres, ended the day up about 4 per cent in Shenzhen and 4.37 per cent in Hong Kong, as peer Eoptolink Technology gained nearly 3 per cent. Suzhou TFC Optical Communication fell 2.62 per cent in Shenzhen.

Why are optical transceivers at the centre of the AI race?

The regulatory scrutiny comes as optical communications is becoming increasingly important in global artificial intelligence infrastructure, a domain where Chinese suppliers hold a commanding market position.