US communications watchdog leaves data-centre components off blacklist, easing market fears as the AI optical interconnect sector booms.
The US Federal Communications Commission (FCC) has published its finalised equipment authorisation rules, allaying market anxiety over potential restrictions on Chinese optical transceivers.
The updated framework—initially adopted in July—tightens authorization requirements for equipment containing hardware made by entities on the US Covered List of national security risks. Crucially, optical transceivers were omitted from the ruling, dispelling speculation following an August Reuters report that suggested the Trump administration planned to block new Chinese models from the US market.
Following the announcement, shares in leading optical transceiver producer Zhongji Innolight rose by 4 per cent in Shenzhen and 4.37 per cent in Hong Kong, while sector peer Eoptolink Technology advanced nearly 3 per cent.
The regulatory reprieve comes as optical communications become critical to expanding global artificial intelligence infrastructure. Industry research firm LightCounting projects the global optical interconnect market will surge from $24.8 billion in 2025 to $111 billion by 2030, driven by the shift from individual card computing power to massive multi-node clusters.
According to Goldman Sachs forecasts, global shipments of mainstream 800-gigabit-per-second (800Gbps) optical transceivers will reach 45 million units this year and 49 million in 2027. Meanwhile, next-generation 1.6-terabit-per-second (1.6Tbps) units are expected to surge from 33 million units this year to 71 million in 2027, overtaking 800Gbps modules within a year.
As data rates escalate, a technological divergence has emerged between global industry players. Chinese tech giants such as Huawei, Alibaba, and Tencent favour Near-Packaged Optics (NPO), an architecture that keeps optical engines in separate packages placed adjacent to switch chips. This shortens electrical connections while leveraging existing pluggable manufacturing ecosystems. Conversely, US leaders like Nvidia and Broadcom are pursuing Co-Packaged Optics (CPO), which integrates optical engines directly onto the same substrate as the switching silicon to maximise performance via advanced semiconductor packaging.
While Chinese manufacturers account for nearly two-thirds of global transceiver volume and 60 per cent of optical datacom revenue, the country remains reliant on western suppliers for high-end upstream components. Financial analysts at Nomura note that foreign suppliers continue to dominate critical optoelectronic parts, including the 200Gbps EML laser chips required for 1.6Tbps transceivers, which account for over half of total component costs.
