Key facts
- Chinese optical module makers' stocks slumped following a Reuters report about a potential U.S. import ban.
- The proposed ban targets new models of Chinese data center components to protect AI infrastructure.
- Zhongji Innolight Co. and Eoptolink Technology Inc. were among the hardest-hit companies.
- Analysts expressed skepticism about the ban's implementation, suggesting it could be a negotiation tactic.
- The Chinese embassy in Washington urged the U.S. to avoid sanctioning Chinese companies.
Chinese optical module makers experienced significant stock declines on Wednesday after a Reuters report indicated that the U.S. is drafting a ban on new models of Chinese data center components, a move intended to safeguard AI infrastructure.
Zhongji Innolight Co., a major global transceiver supplier, saw its shares drop as much as 14% in Shenzhen, while peer Eoptolink Technology Inc. fell 11%. The CSI300 Telecommunication Services Index also dropped as much as 9% in early trade, reflecting heavy losses in export-oriented optical module manufacturers.
The selloff highlights concerns that the proposed ban by the Federal Communications Commission could negatively impact the growth prospects of Chinese firms heavily involved in the AI infrastructure buildout and the U.S. market. However, some analysts believe the market may be overreacting. Jefferies noted that the risk of the ban being enforced remains low and suggested it could be a negotiating tactic ahead of an anticipated meeting between U.S. President Donald Trump and Chinese President Xi Jinping in September.
Xiang Xiaotian, director at Shanghai Chengzhou Investment Management, commented that the news could create a near-term overhang for Chinese suppliers, potentially delaying new product rollouts in the U.S. and slowing capacity expansion. He advised that companies would need to accelerate innovation and enhance competitiveness to mitigate the impact.
The Chinese embassy in Washington, when contacted by Reuters, urged the U.S. to consider the rational voices of businesses in both countries and to cease smearing and threatening Chinese companies with sanctions.