US AI data center boom faces Chinese power-supply risks, CNBC reports

U.S. hyperscalers are racing to build multibillion-dollar AI facilities, and Chinese suppliers provide large portions of the equipment needed to develop them, including transformers, switchgear, batteries and optical technology. President Donald Trump last week signed an executive order declaring a national emergency over the “extraordinary foreign threat” involving bulk-power system equipment produced abroad, and authorized the Energy Department to prohibit or impose conditions on transactions involving components used in the grid and data centers.

Tensions between Washington and Beijing have ratcheted up as Chinese AI models become more advanced and spread globally. The power stack—transformers that step down grid voltage, switchgear that controls electricity, and batteries for backup—is crucial to keeping data centers running with minimal downtime. Analysts say the scrutiny of China in this stack marks a shift from earlier focus on compute hardware.

“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,” Laveena Iyer, senior analyst at The Economist Group, told CNBC.

Ben Boucher of Wood Mackenzie, a supply-chain analyst, said the most notable reliance includes substation transformers, which hyperscalers typically install on site. Yury Dvorkin of Johns Hopkins University estimated that China's share of certain transformer and switchgear categories runs near 30% and accounts for more than 40% of U.S. battery imports, with deeper exposure upstream in copper, electrical steel and battery cathode materials.

Chinese companies also dominate optical technology used to transmit data. Zhongji Innolight and Eoptolink lead global data center optical transceiver revenue, with Chinese makers accounting for roughly two-thirds of global unit supply, according to research firm Counterpoint.

In April, Trump issued a Presidential Determination saying transformers, transmission lines, conductors, substations, high-voltage circuit breakers and power control electronics were “essential to the national defense.” Last week he said that the foreign-supply threat “has become even more acute,” because the rapid growth of advanced manufacturing, data centers, AI and defense production has increased the nation's dependence on abundant, reliable electricity and magnified the consequences of an attack or supply disruption. A White House spokesperson told CNBC that reshoring critical manufacturing has been a top priority and that tariffs, tax cuts and deregulation are drawing trillions in investment to sectors such as steel, semiconductors and autos.

S&P Global forecasts U.S. data center capacity will grow from 62 GW in March 2026 to 152 GW by 2030, driven by high-density AI workloads. Hitachi Energy said in September 2025 it would invest $1 billion to expand U.S. production of critical grid infrastructure, including $457 million for a new large power transformer facility; Siemens Energy said in February it would invest $1 billion in U.S. grid production. CNBC has contacted the U.K. embassy of the People's Republic of China for comment on the order and on the country's involvement in the AI data center supply chain.