The artificial intelligence rivalry between Washington and Beijing has entered a new phase, with both sides tightening controls over hardware, models, and the people who build them. The latest measures target data center infrastructure and the movement of top engineers, even as the two governments agreed last week to open a formal channel on AI safety.
On August 26, President Donald Trump signed an executive order banning foreign-made transformers, high-voltage circuit breakers, and other grid equipment linked to China and 23 other countries. The order took effect immediately, but purchases will only be barred after the Department of Energy identifies risky equipment and publishes implementing rules, due by December 24. The move is part of a broader effort to secure the electrical backbone of American data centers, which are increasingly critical to AI development.
Earlier this year, some global equipment suppliers began regionalizing their data center supply chains. Legrand, a French electrical and digital building infrastructure group, acquired Kratos Industries, a Colorado-based switchgear maker, in February to serve the US market. In April, it bought TES Group, a Northern Ireland-based power distribution specialist, and Keydak, a Guangzhou-based rack maker serving China. Data centers accounted for 26% of Legrand's revenue at the end of 2025.
Lucie Daudigny, a press officer at Legrand, told Asia Times it was too early to comment on the executive order, as many details had not been finalized. James Peacock, chairman of TES Group, said in an interview in Northern Ireland that the components his company uses come from global firms like ABB and Schneider, and he saw no obstacle to delivering to the US market. "The North American market is a great opportunity," he said. "The challenge for TES right now is that we're so busy scaling in Europe. Have we got enough bandwidth to scale in North America at the same time?"
Optical modules in the crosshairs
On September 25, four US senators introduced a bill to bar federal agencies from buying Chinese optical transceivers for national security systems. These modules convert electrical signals into light pulses to move data between servers, and large AI data centers need millions of them. The Coalition for a Prosperous America, a Washington-based lobbying group, notes that Chinese firms control roughly 70% of the global optical module market. Zhongji Innolight, the world's largest manufacturer of high-speed optical transceiver modules, still has hardware inside US data centers and national security systems, although it was added to the Department of Defense's list of Chinese military companies in June.
The focus on data center gear marks an escalation beyond the chip export controls Washington has used since 2022 to slow China's AI progress. Beijing has responded with Southeast Asian data centers, smuggled Nvidia chips, homegrown Huawei processors, and AI models partly distilled from US ones. This year, Washington began allowing exports of more advanced chips such as Nvidia's H200, and Beijing has approved some purchases and is reportedly weighing imports of Nvidia's RTX PRO 5500.
On the talent front, Chinese authorities have started requiring the spouses and children of top AI experts to obtain official approval before traveling abroad, even for short trips, Bloomberg reported on Tuesday. The move comes as new exit and entry rules, effective September 15, allow authorities to stop anyone deemed a threat to national technological security from leaving the country. This is a significant tightening of controls on the people who drive AI innovation.
These moves have intensified despite a three-day summit between Trump and Chinese President Xi Jinping in Washington last week. The two sides agreed to set up a communication channel for AI-related incidents and to hold a bilateral AI dialogue, with senior officials set to gather in Shenzhen in November during the Asia-Pacific Economic Cooperation (APEC) summit. The simultaneous tightening suggests that the dialogue is not yet translating into trust.
On Tuesday, Trump hosted a White House lunch with 31 technology executives, including Elon Musk and Nvidia's Jensen Huang. Recalling a meeting with Xi that Musk also attended, Trump said the Chinese leader was keen to attract AI data centers to China. "He would love to have every single one because they're smart. They want every data center. They want it because that's great for China," Trump told reporters. He said he wanted global firms to build AI data centers in the US rather than in Nordic countries or China, as they would bring investment, jobs, and tax revenue.
Attendees signed a voluntary accord on "superintelligence"—the term Trump prefers instead of artificial intelligence—that includes internal and external reviews of the technology. Trump said the self-policing agreement was morally binding but stopped short of backing new government guardrails. He ruled out working with Xi on governing AI. "A lot of people say, let's do it together with China, but then they're going to be able to immediately gain access to things that we know that..." he said, without finishing the thought.
The rivalry now extends to the very infrastructure of AI, from the chips to the cabinets that house them to the people who design them. As Washington moves to block Chinese components from its data centers, Beijing is locking down its own talent. The two sides may be talking, but they are also building walls.
