Microsoft Presses to Stop Proposed China Ban Threatening AI Data Center Connectivity
Key Facts
Microsoft is pressing President Donald Trump’s administration to stop plans to ban imports of Chinese optical transceivers used in AI data centers, according to a Reuters report citing people familiar with the matter, in a development that puts network-component supplies into the debate over building U.S. AI infrastructure. Data centers need these devices to connect chips and transfer data, making their availability a factor in operating computing equipment. The Information Technology Industry Council said a lack of transceivers could leave AI chips bought by cloud-computing companies unused until the means to connect them become available. Reuters quoted the council’s general counsel, John Miller, as saying the chips “could literally be sitting there, waiting to be connected, unused.” Microsoft’s push comes as the company expands its data center construction in the United States, while the fate of the proposed ban remains undecided.
Microsoft has 35 data centers under construction in the United States and another 134 planned, according to data from Cleanview cited by Reuters. Those figures put the scale of the company’s U.S. expansion plans at the center of its objection to the proposed restrictions on Chinese components. Companies and trade groups say the ban could slow data center construction and hurt U.S. progress in the AI race. Their objection highlights that chips alone are not enough to power computing capacity if the required connectivity components are unavailable. A shortage of these devices could leave chips bought by cloud-computing companies unused, Miller said. The report did not estimate how many devices Microsoft’s plans require or the duration of any potential delay.
Microsoft met in September with officials from the White House Office of Science and Technology Policy and the National Security Council to outline supply challenges that the proposed ban could cause, according to people familiar with the matter cited by Reuters. The meeting indicates that the company discussed its concerns directly with U.S. administration offices before the policy was decided. The objection centers on the effect of restricting imports of components used in data centers and on cloud companies’ ability to operate AI chips they have acquired. The report did not specify the position of the officials who attended the meeting or whether they expressed support for the company’s concerns. It also did not say that the administration had made a final decision on the proposal.
Reuters reported in August that the Federal Communications Commission was working on the ban and that officials hoped to publish it during the year, with it taking effect upon publication. But sources in the report said the commission could still revise the restrictions or abandon them. The proposal therefore remains at a stage where its details could change or it could be withdrawn, according to the available information about its progress. The report did not specify a final decision date or the final scope of imports that could be covered by the ban. That leaves the potential effect of the measure on data center construction plans dependent on what the commission decides about the final version.
Against the backdrop of the debate, Microsoft said in an earlier report that China accounted for 1.5% of its global revenue in 2024, according to a Reuters report published on August 13, 2026. The same report said U.S. export restrictions on advanced technology had hindered the expansion of the company’s AI and cloud-computing businesses in China. This provides context for the company’s relationship with technology restrictions between the two countries, while the current proposal concerns imports of components for data centers inside the United States. In its annual filing for the fiscal year ended June 30, 2026, Microsoft warned that changes to AI export-control policies and licensing terms could adversely affect its business, strategy and operations. No share price for the November 10 session was included in the available data; the latest recorded close was $545.18 on November 9, 2026.