Malaysia becomes top market for Chinese optical transceivers as US weighs ban

Malaysia has emerged as the largest destination for Chinese optical transceivers, receiving US$260 million worth of the products in June, as Washington considers restrictions on Chinese-made data centre components.

The restrictions under consideration would target optical transceivers — components that transmit data at high speeds within and between data centres.

China exported US$61.6 million of the products to the US in June, accounting for 8.7% of its worldwide shipments but only a fraction of its overall exports, limiting the wider economic impact of any restrictions.

The US was previously the biggest destination for Chinese transceivers, but shipments have fallen sharply since President Donald Trump returned to the White House last year. Malaysia, where investment in data centres has surged, has taken its place — a shift that illustrates how Chinese companies may be able to cushion the impact of US curbs by selling into other fast-growing markets.

Overseas shipments of optical transceivers rose 27% in the first half of 2026 from a year earlier.

The Federal Communications Commission (FCC) is drafting an order to ban Chinese-made data centre components, Bloomberg reported Tuesday, citing a person familiar with the matter. Reuters reported earlier that the agency was considering barring imports of new models of Chinese optical transceivers.

Chinese optical-equipment stocks slid on Wednesday, with Zhongji Innolight Co falling as much as 14% in Shenzhen before paring the decline. US, European and Japanese suppliers rallied, suggesting investors expect the restrictions to hurt Chinese firms while benefiting overseas rivals.

Still, a ban would have a limited effect on China's AI-related exports, which accounted for nearly 23% of its overall shipments last year, said Vicky Zhou, Greater China economist at Australia and New Zealand Banking Group Ltd.

"Other major AI-related products, including chips and computers, may face less threat from US bans because Chinese companies mainly produce lower-end models sold in Southeast Asia," Zhou said, adding that Chinese AI exports "will continue to be solid, supported by higher prices".

The People's Daily, the official newspaper of China's ruling Communist Party, warned Wednesday of countermeasures, accusing the US of "unilateral bullying" over the FCC's move to tighten curbs on some foreign-made robots and power inverters.

Bloomberg Intelligence analyst Sean Chen said Chinese suppliers control more than half of the high-speed transceiver market, leaving cloud-computing firms few near-term alternatives. Companies "may also be able to circumvent the restrictions by shipping products through factories in Southeast Asia, depending on how the FCC defines a Chinese optical transceiver", he said.