The Trump administration is tightening scrutiny of Chinese-made equipment that powers America’s data centers, citing national security risks as demand for electricity to run AI systems surges.
CNBC reports that President Donald Trump last week signed an executive order declaring a national emergency over foreign-made equipment used in the bulk-power system, calling it an “extraordinary foreign threat.” The order gives the U.S. Energy Department authority to prohibit or place conditions on certain transactions involving equipment used in the power grid and data centers.
In a statement tied to the order, Trump said, “Since my first term, the threat to the United States regarding foreign supply of bulk-power system electric equipment has become even more acute.” He added, “The rapid growth of advanced manufacturing, data centers, artificial intelligence, and defense production has increased the Nation’s dependence on abundant, reliable electricity and magnified the consequences of a successful attack or supply disruption on the bulk-power system.”
The order follows an April Presidential Determination in which Trump named transformers, transmission lines and conductors, substations, high-voltage circuit breakers and power control electronics as “essential to the national defense.”
Chinese companies supply significant shares of several categories of equipment central to data center power systems, including transformers, switchgear, batteries and optical transceivers crucial for AI data centers. Yury Dvorkin, an associate professor at Johns Hopkins University, said “the mid-term exposure is concentrated in grid connectors: transformers, switchgear, and batteries.” He added, “China’s share of certain transformer and switchgear categories runs near 30%, and it accounts for over 40% of U.S. battery imports.” Dvorkin also pointed further up the supply chain: “Our analysis shows that there is also a deeper exposure upstream: copper, electrical steel, and battery cathode materials.”
Ben Boucher, senior analyst for supply chain at Wood Mackenzie, said dependence on Chinese imports extends across multiple parts of AI infrastructure. “There are a few key areas that the AI infrastructure buildout is increasingly dependent on Chinese imports,” he said, singling out one component: “The most notable ones include substation transformers, which hyperscalers typically have on site to step transmission voltage down.”
Laveena Iyer, a senior analyst at The Economist Group, told CNBC that attention to Chinese involvement in U.S. data center power infrastructure has grown substantially in recent months. “Scrutiny over China’s presence in the U.S. data centre power stack has only risen over the past eight months or so, this is a shift from the previous focus that centred solely on the compute stack,” she said.
Some companies have already moved to expand domestic production. Hitachi Energy announced in September 2025 a $1 billion investment to build up critical grid infrastructure manufacturing in the U.S., including $457 million for a new large power transformer facility. Siemens Energy said in February it would invest $1 billion in U.S. production of grid and gas turbine equipment for AI infrastructure and data centers.
The optical transceiver market shows a similar pattern. Zhongji Innolight and Eoptolink lead the world in data center optical transceiver revenue, and Chinese firms together account for roughly two-thirds of global optical transceiver unit supply, according to an August report by Counterpoint analyst Neil Shah.
U.S. optical technology firms Lumentum and Coherent stand to benefit from any restrictions placed on their Chinese competitors. Nvidia invested $2 billion each in the two companies in March.
Read more at CNBC here.
Lucas Nolan is a reporter for Breitbart News covering issues of AI, free speech, and online censorship.
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