This new FCC rule could upend the router market

Finding additional memory for your PC is already a challenge. Now, connecting to the internet could get tougher, too.

The Federal Communications Commission (FCC) released a notice Monday that will prohibit all new consumer-grade routers that were not made in the United States. Routers made in other countries, the alert read, “pose unacceptable risks to the national security of the United States or the safety and security of United States persons.”

At least 60% of the routers in U.S. homes are made overseas, with the majority coming from China. Officials fear China could exploit those devices to launch attacks on critical infrastructure or steal sensitive information.

“Malicious actors have exploited security gaps in foreign-made routers to attack American households, disrupt networks, enable espionage, and facilitate intellectual property theft,” the FCC wrote. “Foreign made routers were also involved in the Volt, Flax, and Salt Typhoon cyberattacks targeting vital U.S. infrastructure.”

The ban applies only to new routers from other countries. The agency is recommending no action for devices already in homes and businesses. Retailers can continue selling existing inventory, and routers previously authorized by the FCC can still be imported, sold, and used. That suggests any suspected risk is not viewed as immediate.

The order is likely to face legal challenges.

The move is the latest step in the Trump Administration’s 2025 National Security Strategy, which states “the United States must never be dependent on any outside power for core components—from raw materials to parts to finished products—necessary to the nation’s defense or economy.”

But implementing a ban on a product where even U.S.-based companies rely heavily on overseas manufacturing could create supply headaches. The FCC included a potential loophole by allowing exemptions for companies that obtain “conditional approval” from the Department of Defense or the Department of Homeland Security.

(It is worth noting that the FCC’s “Covered List” of routers deemed to pose an unacceptable risk does not restrict the sale or import of routers used by the federal government. Additionally, the FCC said companies could import small batches of unauthorized devices for product development purposes, but could not market or sell those.)

If you already own a router on the Covered List, you will not be stuck with an expensive paperweight. A waiver allows those devices to continue receiving software and firmware updates so they remain usable and can defend against hacker attacks.

The decision will impact several manufacturers, but perhaps none more than TP-Link. The company was founded in China but has since established its headquarters in Irvine, California. It has faced prior investigations over concerns about ties to China, though no action had been taken before Monday’s announcement. (TP-Link was not specifically mentioned in the FCC announcement, and the company did not immediately respond to a request for comment.)

The new rules echo a previous ban on smartphones developed by Chinese companies, which had the biggest impact on Huawei Technologies.

Investors are already betting on who benefits. Shares of Netgear rose more than 12% in early trading Tuesday, with Wall Street seemingly expecting the company to receive an exemption and face reduced competition going forward.