China’s two biggest optical module makers took a beating on Wednesday. Zhongji Innolight fell as much as 16%, according to the South China Morning Post. Bloomberg put the intraday drop at 14%. Eoptolink Technology slid with it.
The trigger was a Reuters report that the FCC intends to halt imports of new models of optical transceiver. The stated aim is to stop Chinese firms stealing data or planting malware inside American facilities. It narrows a broader draft ban on Chinese data centre devices onto one specific component.
That component is not exotic. Optical transceivers sit at either end of a fibre link and translate electrical signals into light and back again. Every rack in a modern AI cluster depends on them.
A rule aimed at China that lands on American buyers
Research firm Counterpoint published a note on Wednesday warning that the ban would damage the companies it is meant to protect. Hyperscalers such as Amazon and Microsoft would face higher costs if Chinese optics suppliers were cut off, analyst Neil Shah wrote. Their expensive AI accelerators would also run at lower utilisation.
