America's AI Data Centers Run on Chinese Parts. Washington Wants to Change That.

Key points

• China supplies roughly 30% of certain transformer and switchgear categories used in US data centers, according to Johns Hopkins University research.
• Chinese firms account for over 40% of US battery imports and about two-thirds of global optical transceiver unit supply.
• US data center capacity is forecast to nearly triple, from 62 gigawatts in March 2026 to 152 gigawatts by 2030, per S&P Global.
• President Trump signed an executive order in 2025 declaring a national emergency over foreign-made power equipment, authorising the Energy Department to block certain purchases.
• Power transformer and substation markets already face estimated shortages of 15% and 8% respectively in 2026, before any new import restrictions bite.

America is spending hundreds of billions of dollars building the data centers that run artificial intelligence. There is one uncomfortable detail buried inside that spending: a large slice of the hardware keeping those facilities powered and connected is made in China.

That dependency, first reported in detail by CNBC Tech, is now drawing urgent attention in Washington.

What exactly comes from China?

China dominates several categories of equipment that data centers cannot do without. The exposure is broader than most people realise.

Data centers need transformers, large electrical devices that take high-voltage power arriving from the grid and step it down to levels that servers and cooling systems can safely use. They need switchgear, which are control panels packed with switches and circuit breakers that protect the facility if something goes wrong. They need backup batteries. And they need optical transceivers, small modules that fire data as pulses of light along fibre-optic cables between buildings and campuses.

China's share of certain transformer and switchgear categories runs near 30%, according to Yury Dvorkin, an associate professor at Johns Hopkins University. China accounts for over 40% of US battery imports. Chinese manufacturers, including Zhongji Innolight and Eoptolink, collectively supply roughly two-thirds of global optical transceiver units, according to research firm Counterpoint.

The exposure goes deeper still. China also dominates the raw materials those components are built from: copper, electrical steel, and battery cathode materials.

Why is this a problem right now?

AI is hungry for electricity, and the demand is accelerating fast. US data center capacity is forecast to grow from 62 gigawatts in early 2026 to 152 gigawatts by 2030, S&P Global found. Building that infrastructure requires enormous quantities of exactly the equipment China currently supplies cheaply and quickly.

The trouble is that power transformers and substations are already in short supply. Wood Mackenzie estimates shortages of around 15% and 8% respectively in 2026, before any restrictions take effect. Data center operators have been leaning on Chinese manufacturers specifically to cut waiting times for the largest transformer sizes.

President Trump signed an executive order this year declaring a national emergency over foreign-made bulk-power equipment and authorising the Energy Department to block or place conditions on related purchases. The administration is also reportedly drafting a ban on new Chinese optical transceivers.

What happens if the US cuts Chinese suppliers off?

Higher costs and longer waits, at least in the short term. That is the clear conclusion from analysts.

Nvidia invested $2 billion each in US optical component makers Lumentum and Coherent in March, signalling a push toward domestic alternatives. But Counterpoint analyst Neil Shah warned in an August report that Western rivals currently lack the factory space, automated assembly lines, and production scale to replace Chinese volume within one to two years.

Hitachi Energy committed $1 billion in September 2025 to expand US grid hardware production, including a $457 million transformer facility. Siemens Energy pledged another $1 billion in February for US grid and turbine equipment. Those investments take years to bear fruit.

The comparison analysts reach for is the 5G mobile network rollout, where stripping out Chinese telecoms gear mid-build caused delays and rising costs for carriers. Washington appears determined not to repeat that experience with AI infrastructure.

Common questions

Does this affect ordinary people?

Not directly today, but slower or costlier AI infrastructure could slow the rollout of AI-powered services and push up electricity prices in areas where large data centers are being built.

Are there US-made alternatives available right now?

For some components, yes, but not at the scale or speed needed. Domestic and allied-country manufacturers are expanding, though most analysts say full replacement of Chinese supply will take several years.