Four senators from both parties want Chinese networking gear out of the federal government's most sensitive systems. On Friday, Sens. John Cornyn (R-Texas), Dave McCormick (R-Pa.), John Fetterman (D-Pa.) and Ruben Gallego (D-Ariz.) introduced legislation that would prevent the federal government from using optical transceivers made by Chinese companies Eoptolink and Zhongji Innolight in sensitive systems.

US Bill Targets Chinese AI Data Center Components

Optical transceivers are critical networking components that convert electrical signals into light for transmission over fiber-optic cables. They are increasingly important to AI data centers, some of which can require millions of the devices as computing demand surges.

"We shouldn't rely on China for technologies that are essential to our national security," McCormick said in a statement.

Cornyn said critical government communication and information systems must be "safe, reliable, and free of any foreign interference," arguing that Chinese technology could undermine that objective.

Lawmakers Cite Potential China Security Risks

Supporters of the legislation say Chinese-made optical transceivers could potentially be exploited by Beijing to interfere with access to U.S. AI tools and cloud infrastructure, Reuters reported.

Innolight has also been included on a Pentagon list of companies alleged to have ties to China's military.

The proposed restrictions would initially apply to the two named manufacturers, while giving the Commerce and Defense secretaries authority to add other companies to the list.

Industry Warns of AI Infrastructure Disruption

The technology industry has raised concerns that restricting Chinese suppliers could disrupt the U.S. data center expansion and make it harder for American companies to keep pace with China in AI, the report noted.

The Information Technology Industry Council urged the Federal Communications Commission in an Aug. 13 letter not to add optical transceivers to a trade blacklist, warning of potential "supply disruptions" affecting data center deployment and U.S. AI leadership.

U.S. companies Coherent Corp. (NYSE: COHR) and Lumentum Holdings Inc. (NASDAQ: LITE) offer competing products but currently lack the scale to fully replace Chinese suppliers, according to a Foundation for American Innovation report.

If enacted, the bill would give the government five years to comply with the restrictions.

US Seeks AI Understanding With China

Meanwhile, on Sunday, Treasury Secretary Scott Bessent said the U.S. is seeking a "shared vision of common goals and common threats" with China on AI.

Washington has proposed a framework for both countries to notify each other of AI incidents that could pose national security risks.

The development also comes amid China's broader efforts to expand and strengthen its domestic AI infrastructure.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by MarketDash editors.