Microsoft is reportedly lobbying the Trump administration against its mooted ban on optical transceivers.

August reports suggested the Federal Communications Commission (FCC) is working on measures to restrict imports of transceivers over national security and data exfiltration fears.

According to Reuters, Microsoft is a leading voice trying to fight a potential ban. The hyperscaler relies on transceiver suppliers like Zhongji Innolight for its transceivers, a vendor that was recently added to the Pentagon’s list of alleged Chinese military-backed companies.

China is the world’s leading supplier of optical transceivers, with hyperscalers believed to have spent “billions” on pluggables to fuel their AI infrastructure buildouts. Yole Group projections suggest AI is driving the market to be worth $112.3 billion by the turn of the decade.

Any potential ban is yet to be finalized, though Reuters suggests Trump officials were looking at barring imports of transceivers at the highest-end data rates, such as 3.2 terabits per second, similar to its speed-focused restrictions on AI chips going to China. 3.2 Tb/s transcievers are yet to hit the market, not expected to start ramping until around 2028, with the fastest devices currently handling data rates of 1.6 Tb/s.

Microsoft’s voice adds to lobbying efforts by the Information Technology Industry Council (ITI), which warned in an August letter that U.S. data center buildout and “AI leadership” would be impacted by a potential ban.

Restrictions would open the door for U.S. alternatives, with Coherent and Marvell acquiree Lumentum already scaling production though no way near the scale potentially required to outright replace Chinese vendors. One Elon Musk looks to be taking advantage too, having recently bought a nascent transceiver startup founded by former SpaceX engineers in Mesh Optical Technologies.

Despite buildout efforts, though, LightCounting predicts that the sevenfold advantage Chinese transceiver makers held over U.S. competitors in 2022 will contract to a 2.5-times margin by 2031.