U.S. AI data centre expansion will likely encounter higher procurement costs and slower deliveries because key power and optical components are concentrated in Chinese supply chains. The administration's national emergency measures targeting foreign-made bulk-power equipment, and recent steps such as the Federal Communications Commission adding power inverters to its Covered List in July, tighten the gate for imports that keep high-density facilities running.
Analysts say exposure has moved beyond chips and servers to the power stack that feeds hyperscale sites. "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," said Laveena Iyer, senior analyst at The Economist Group. The power stack includes on-site substation transformers, centralised switchgear and backup batteries, equipment hyperscalers increasingly import.
Yury Dvorkin, associate professor at Johns Hopkins University, flagged the scale of the dependence, saying "China's share of certain transformer and switchgear categories runs near 30%, and it accounts for over 40% of U.S. battery imports." He added supply risks stretch upstream to copper, electrical steel and battery cathode materials, keeping vulnerabilities even if finished goods are reshored.
Optical components present a similar concentration. Firms such as Zhongji Innolight and Eoptolink sit atop revenue rankings, and Counterpoint research finds Chinese manufacturers account for roughly two-thirds of global unit supply for optical transceivers. That reliance has prompted further regulatory moves, and reports say the administration is preparing a ban on imports of new Chinese optical transceivers.
Some suppliers are responding with U.S. investments, but scaling domestic capacity will take time. Hitachi Energy announced in September 2025 a $1 billion expansion in U.S. grid infrastructure production, including $457 million for a new large power transformer facility. Siemens Energy said in February it would put $1 billion into U.S. production for grid and gas turbine equipment to support AI infrastructure and data centre growth.
Demand projections underline the pressure on supply chains. S&P Global projects U.S. data centre capacity will climb from 62 GW in March 2026 to 152 GW by 2030 as AI workloads drive higher power density. As regulators tighten screening and firms invest domestically, the near-term outcome will likely be higher costs and strained delivery schedules for the infrastructure needed to meet that surge, while longer-term shifts in sourcing and capacity could rebalance market power in favour of onshore manufacturers.
