China dominates critical AI data center components

A new analysis warns of a significant supply chain vulnerability in the United States' artificial intelligence expansion. While billions are being invested in AI data centers, the critical components required to link AI chips and facilitate high-speed data transfer—specifically optical transceivers—are largely controlled by Chinese manufacturers.

According to the Bull Moose Project, China supplies approximately two-thirds of the global market for these devices. Leading suppliers include Innolight and Eoptolink, with Innolight notably appearing on the Department of War’s Chinese Military Companies list this year.

The report suggests this dominance mirrors previous industrial patterns in solar panels and batteries, where Chinese state funding allowed companies to undercut foreign competitors and secure market dominance. There are also concerns regarding transshipment, where Chinese firms may route goods through third countries to bypass existing tariffs.