Uncle Sam strains to thread the AI safety needle

The White House has been clear: AI is a race, and the United States needs to win. It is nonetheless increasingly willing to trade off speed against security. Regulators are weighing a ban on new models of Chinese-made optical transceivers, critical components for shuttling information around data centers, Reuters reported on Tuesday. At least in this case, woes elsewhere might mask the impact.

Optical transceivers convert electrical signals from chips into light that can then zip information around at incredible speed. Even amid rapid growth, it’s a relatively small market: Bank of America analysts predict sales should hit $26 billion this year, up from under $13 billion in 2025. Yet scaling up these super-fast links is critical to building larger and larger computing clusters.

Chinese companies accounted for more than half of global optical transceiver shipments last year, according to technology market research outfit TrendForce. Zhongji Innolight 300308.SZ, valued at over $150 billion, said in the prospectus for its recent Hong Kong listing that it accounts for 28% of the market.