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Infrastructurepublished

Trump Order Opens Path to Restrict Foreign Power Gear for AI Data Centers

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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Trump Order Opens Path to Restrict Foreign Power Gear for AI Data Centers
Trump Order Opens Path to Restrict Foreign Power Gear for AI Data Centers
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An executive order signed by the Trump administration has opened a path to block or condition transactions involving foreign-made equipment used in America’s bulk-power system. That puts a new layer of regulatory risk around the hardware AI data centers need to connect to the grid and to one another. The exposure is broad. Transformers step high-voltage electricity down for servers and cooling systems. Switchgear controls and protects that flow, batteries provide backup power, and optical transceivers move huge amounts of data through fiber between facilities. Chinese suppliers account for nearly 30 percent of certain U.S. transformer and switchgear categories, more than 40 percent of battery imports, and roughly two-thirds of global optical-transceiver units. The timing is difficult. S&P Global expects U.S. data-center capacity to grow from 62 gigawatts in March 2026 to 152 gigawatts by 2030. Meanwhile, Wood Mackenzie forecasts 2026 shortages of 15 percent for power transformers and 8 percent for substations, with equipment above 100 MVA most constrained. The FCC has already placed foreign-made power inverters on its Covered List. A reported ban on new Chinese optical-transceiver imports has not been confirmed by the FCC or the White House. Hitachi Energy and Siemens Energy have each announced another billion dollars for U.S. production, but Counterpoint says Coherent and Lumentum cannot replace leading Chinese suppliers’ volume within 12 to 24 months. The immediate constraint is whether domestic capacity arrives before restrictions collide with existing shortages.

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3 key points

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...

  1. 01

    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.

  2. 02

    Wood Mackenzie forecasts 2026 shortages of 15% for power transformers and 8% for substations; transformers above 100 MVA are most constrained.

  3. 03

    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.

The hardware behind the dependency

  • Transformers reduce high-voltage grid electricity to levels used by servers and cooling equipment. Switchgear includes switches, fuses and circuit breakers.
  • Batteries provide backup power. Optical technology uses light through fiber-optic cables to transmit large quantities of data, while optical transceivers enable high-speed transmission between data centers.
  • China accounts for nearly 30% of certain U.S. transformer and switchgear categories and more than 40% of U.S. battery imports, according to Johns Hopkins associate professor Yury Dvorkin.

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.

Restrictions extend beyond the order

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.

Domestic expansion has a timing problem

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

Our Read

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.

Related coverageU.S. Data-Center Construction Hits $75B Annual Pace as AI Buildout Meets BottlenecksMcKinsey Sees $7 Trillion Data-Center Buildout by 2030, Raising the Stakes for Power Gear

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Finding 01

The policy focus is moving beyond advanced chips to the physical systems that let AI campuses run.

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Sources

  1. cnbc.comHidden China risks are emerging in America’s multibillion-dollar AI data center boom

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