Marvell Technology and other optical-networking stocks were rising sharply on Tuesday. The companies could be about to get relief from Chinese competition.
Marvell and Corning were both up more than 7% in the premarket, while Lumentum and Coherent were rising more than 12%.
The trigger was a report that the Federal Communications Commission is drawing up plans to prohibit imports of Chinese optical transceivers with a ban set to take effect as soon as this year, according to Reuters, which cited people familiar with the matter.
The FCC didn't immediately respond to a Barron's request for comment early on Tuesday.
Ever-larger data centers require optical transceivers to more efficiently transfer data by converting electrical signals into light and it's a fast-growing business amid the artificial-intelligence boom. Marvell makes the digital signal processors within those transceivers, while Lumentum and Coherent manufacture the transceivers.
The biggest casualty of such a ban would be Chinese data center supplier Zhongji InnoLight, which generated more than half of its revenue last year from the U.S. and is estimated by Nomura analysts to have roughly a 30% market share in the global AI transceiver sector.
Innolight is a key supplier to global customers such as Google and Nvidia.
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