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The policy push reaches equipment that supplies electricity and moves data across AI facilities. Replacement capacity may be harder to secure while transformer and substation markets are already tight.
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The order could turn a supply-chain dependency into a procurement and deployment constraint for U.S. AI infrastructure. Energy officials can now block or condition transactions involving foreign-made bulk-power equipment, while the FCC has already listed foreign-produced inverters as security risks. The timing is difficult: S&P Global expects U.S. data-center capacity to reach 152 GW by 2030, but Wood Mackenzie projects 2026 shortages for transformers and substations.
China supplies nearly 30% of certain U.S. transformer and switchgear categories, over 40% of battery imports, and roughly two-thirds of global optical-transceiver units.
Wood Mackenzie forecasts 2026 shortages of 15% for power transformers and 8% for substations; transformers above 100 MVA are most constrained.
A reported ban on new Chinese optical-transceiver imports remains unconfirmed by the FCC and White House.
Equipment needed to power and connect U.S. AI data centers now faces heightened regulatory risk as demand rises. An executive order signed the week before publication declared a national emergency over the foreign threat posed by bulk-power system equipment and authorized the Energy Department to prohibit or condition certain transactions involving foreign-made components.
Chinese firms supply significant portions of the transformers, switchgear, batteries and optical transceivers used in U.S. AI data centers. That reliance puts equipment between the grid and servers, along with the fiber links that carry data between facilities, inside a widening policy debate.
Optical networking is particularly concentrated. Counterpoint says Zhongji Innolight and Eoptolink lead global data-center optical-transceiver revenue, while Chinese firms collectively account for roughly two-thirds of global unit supply.
The FCC added foreign-produced power inverters to its Covered List in July. The list contains equipment and services the U.S. government has determined pose an unacceptable national-security risk. The Trump administration is also reportedly drafting a ban on imports of new Chinese optical transceivers, but neither the FCC nor the White House confirmed that proposal.
Suppliers are adding U.S. production. Hitachi Energy announced a $1 billion U.S. investment in September 2025, including $457 million for a large power-transformer facility. Siemens Energy announced a further $1 billion investment in February for U.S. grid and gas-turbine equipment supporting AI infrastructure and data-center expansion.
Those announced investments do not resolve the immediate replacement challenge. Counterpoint’s Neil Shah said Coherent and Lumentum lack the cleanroom capacity, automated packaging infrastructure and yield scale to absorb Zhongji Innolight and Eoptolink volume within 12 to 24 months. Wood Mackenzie says shortages are most acute for transformers above 100 MVA, a segment where data centers have used Chinese manufacturers to manage lead times.
Editorial analysis
The policy focus is moving beyond advanced chips to the physical systems that let AI campuses run. The reported optical-transceiver import ban is the concrete next event to watch: if it proceeds, it would test how quickly buyers can replace a supply base that Counterpoint says provides roughly two-thirds of global units. The timing is difficult. U.S. data-center capacity is forecast to rise sharply through 2030 while key power equipment is already scarce. Hitachi Energy’s and Siemens Energy’s investment plans point to a domestic response, but announced spending does not establish near-term equipment availability.
Citation desk / original work
The policy focus is moving beyond advanced chips to the physical systems that let AI campuses run.
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