Shares of major Chinese optical module manufacturers declined sharply following reports that the Trump administration was developing an import restriction on new models of Chinese data centre components. The CSI300 Telecommunication Services Index fell as much as 9% in early trading.
Zhongji Innolight, Eoptolink Technology, and Suzhou TFC Optical Communications were among the hardest hit. Zhongji Innolight, ranking as the 10th-largest China-listed stock by market value, shed roughly 10% in both Shanghai and Hong Kong trading. Eoptolink Technology declined 10%, while TFC Optical slumped roughly 6%. The proposed restrictions target optical transceivers, components that enable data transmission over fibre-optic cables within data centres.
The U.S. government cited national security concerns as the rationale for the measure. Zhongji Innolight had previously disclosed that 62% of its revenue came from the U.S. market in the first quarter and had warned that escalating Sino-U.S. trade tensions could significantly impact its financial performance. Eoptolink Technology generates 96% of its sales from overseas markets, making it particularly vulnerable to import restrictions.
Some analysts suggested the market reaction may have been overextended. Jefferies assessed the probability of the ban materializing as low, characterizing the U.S. move as a negotiation tactic ahead of planned diplomatic discussions in September. Legal experts noted that U.S. policy toward China has increasingly shifted from restricting technology transfers to blocking Chinese market access and investment. Industry observers recommended that affected Chinese companies prioritize diversifying their customer base and geographical markets as a strategic response.
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