Chinese optical-module stocks rebound as analysts downplay ‘mild’ AI curbs proposed by US

Shares of China’s top optical-module firms recovered from early declines on Wednesday after analysts dismissed potential U.S. restrictions on Chinese AI data centers. The measures, proposed by the FCC, would likely keep current supply chains intact but face obstacles due to America’s heavy dependence on Chinese manufacturing. Zhongji Innolight fell 7.3% in Shenzhen and 6.7% in Hong Kong, Eoptolink Technology dropped 5.3%, while Suzhou TFC Optical Communication rose 2.3% in Shenzhen.

In contrast, their U.S. counterparts Coherent and Lumentum surged 12.4% and 8.9% respectively, following a Reuters report that the Trump administration was drafting a measure to block new Chinese optical transceivers. China’s foreign ministry strongly opposed the potential U.S. move, stating it would "seriously hinder normal economic and trade exchanges."

Legal experts noted the rule is designed to phase out Chinese hardware gradually rather than trigger an immediate embargo. The measure is "relatively mild," with companies expected to continue selling existing approved products but manufacturers must produce new ones in the U.S. to avoid restrictions. The restriction arrives at a critical time for the industry, as it transitions from 800G modules to advanced 1.6T transceivers for AI computing clusters.

Chinese manufacturers dominate the market, accounting for nearly two-thirds of global shipments and 60% of optical datacom revenue. While Western competitors have competitive technology, they often lack the necessary infrastructure to absorb the current volume of Chinese-supplied modules.