Column|Optics: FCC Transceiver Rules Might Be Better Than Feared, and Better for Top Chinese Players Than You'd Think

Investors have been discussing yesterday’s strength in optics stocks, particularly Lumentum and Coherent. The gains have been attributed to a widely discussed note reporting a senior legal team’s view of how the FCC may frame restrictions on Chinese-built optical transceivers.

We examine the context for that note and the potential effects on suppliers.

Three Preliminary Observations

• First, there is no public draft of the proposed transceiver rules. The note appears to relay an external senior legal team’s account of discussions with the White House and the FCC.
• Second, earlier Covered List entries identified equipment from specific entities, while more recent additions use broader origin-based categories, such as routers produced abroad and foreign-produced power inverters. Under that approach, the definitions matter and remain under discussion. As we explain below, we expect U.S. optics and component companies to benefit under either of the interpretations being discussed.