Last October, Deputy Secretary of War Stephen Feinberg sent a letter to the congressional defense committees recommending eight Chinese firms be added to the Pentagon’s 1260H list. This is the list that designates “Chinese military companies operating in the United States,” and is generally seen as the first step towards prohibiting the U.S. government — and sometimes the general public — from procuring equipment manufactured by Chinese firms. Two of the eight Feinberg listed were Zhongji Innolight and Eoptolink Technology. Most Americans will not recognize either name, but they should. Together, the two firms supply the bulk of the high-speed optical transceivers running inside American data centers.
An optical transceiver is a small module that converts electrical signals into laser pulses and vice versa. Modern data centers depend on them: almost every switch port runs through a transceiver, every high-speed server network interface card plugs into one, and every long-haul connection between two facilities terminates in a pair. A typical artificial intelligence (AI) datacenter counts its transceivers in the millions. AI training clusters densify the count further: a single NVIDIA GB200 cluster requires nearly 18,500 optical transceivers.
But the dependency is not AI-specific; energy providers, cloud services, enterprise computing, and telecommunications all rely on these transceivers and eight of the top ten suppliers globally are Chinese firms. Innolight and Eoptolink are the two most aggressive overseas exporters, earning 87 and 78 percent of their 2024 revenue outside China respectively. The bulk of this revenue comes from North America.
