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Trump is considering banning imports of optical transceivers from China, and the implications could be much larger than they seem 🚨
According to reports, the Trump administration is moving forward with examining a ban on imports of optical transceivers from China, a step that if implemented could shake up the supply chain for artificial intelligence infrastructure. ☢️
Today, about 60% of 800G optical modules for Nvidia come from two Chinese companies, Innolight and Eoptolink; the rest of the supply is mainly divided among Lumentum, Coherent, and Broadcom. 🏭
The impact is much broader than Nvidia:
Of the 10 largest ODM manufacturers globally in optical and transceiver fields, 7 are Chinese, and they hold over 50% of the optics market at speeds of 100G and above, in terms of revenue. 📊
The three largest Chinese companies, Innolight, Eoptolink, and HG Genuine, alone account for 55% of the global market. 🇨🇳
Therefore, such a ban would not affect just one supplier or one customer... 💡
but rather a significant portion of the entire supply chain for communication infrastructure that powers data centers of the AI generation. 📱
On the other hand, the likelihood that the move will be approved in its current form is not high,
Such a step could put chip manufacturers, hyperscalers, and data center operators in a situation of shortage for one of the most critical components for expanding artificial intelligence infrastructure. ⏳
And it might not even be necessary for the ban to be approved to see the impact,
Similar to what happened during periods of tension in the Strait of Hormuz, the mere possibility of supply disruption caused a sharp rise in risk premiums and early preparations by companies. 💡
Even if the passage was not actually blocked, the uncertainty changed market behavior. 📊
The same principle can apply here:
If companies fear that access to Chinese suppliers could be compromised in the future, they may start diversifying their supply chains now and increase orders from American and allied suppliers, even if costs are higher. 📊
In such a scenario, companies that could benefit from demand shifting include Lumentum ($LITE), Coherent ($COHR), and Broadcom ($AVGO), while Nvidia ($NVDA) and hyperscalers will try to ensure the availability of critical components for deploying the next generation of AI infrastructure. 📱
The news itself does not yet change reality,
but it can certainly start to change market behavior. 🕯
The market, by its nature, prices in the future,
Therefore, the impending risk sometimes affects companies' purchasing decisions long before the regulation itself takes effect. 💡