(Bloomberg) — Zhongji Innolight Co. led a slump in Chinese optical stocks after Reuters reported that the US is drafting a ban on imports of some Chinese data center components to protect AI infrastructure.
Shares of Innolight, one of the world’s largest transceiver suppliers, dropped as much as 14% in Shenzhen before paring the loss, while industry peer Eoptolink Technology Inc. fell 11%. Innolight will likely be hit by the ban, Reuters reported.
The selloff indicates concerns that the Federal Communications Commission’s proposed ban may hit the Chinese firms’ growth outlook, given their heavy exposure to the AI infrastructure buildout and the US market. It contrasts with Tuesday’s rally among U.S. and European optical-equipment makers following Reuters’ report.
Innolight and Eoptolink didn’t immediately respond to Bloomberg’s emailed request for comment.
“The news could act as a near-term overhang for Chinese optical-module suppliers, delaying the rollout of new products in the U.S. and potentially slowing capacity expansion plans,” said Xiang Xiaotian, director at Shanghai Chengzhou Investment Management. “Over the longer term, they will need to accelerate innovation and strengthen product competitiveness to offset the impact.”
The FCC’s proposed ban aims to prevent Chinese firms from installing malware or stealing data from the data centers that are critical to the AI boom, Reuters reported. The Chinese embassy in Washington urged the US to “heed the objective and rational voices of the business communities in both countries” and “stop smearing Chinese companies and threatening them with sanctions,” when contacted by Reuters.
–With assistance from Dong Lyu and Charlotte Yang.
(Updates with chart and more details)
More stories like this are available on bloomberg.com
