Oracle has canceled an estimated $7 billion deal to lease about 100,000 advanced AI chips to Tencent, the Financial Times reported Wednesday, after US officials raised concerns about the arrangement with the company. The five-year lease would have given Tencent computing capacity across several Oracle data centers in Southeast Asia, and had been described as Tencent's largest overseas lease.
Under the reported terms, Tencent was to pay about 30% of the contract value upfront. The chips involved are ones Chinese companies cannot buy or use inside China under rules set by both Washington and Beijing, which is why Tencent sought the capacity offshore. The reports do not name the chip model or the specific countries where the data centers sit.
Pressure on the deal came from both governments. US officials approached Oracle to raise concerns, according to the report, which did not name them. In China, senior officials from Guangdong, the province where Tencent is based, visited the company and urged it to back domestically made chips.
Key facts
- 01Oracle canceled an estimated $7B, five-year lease of about 100,000 AI chips to Tencent, the Financial Times reported Nov. 4.
- 02The capacity sat in several Oracle data centers in Southeast Asia, and Tencent was to pay about 30% upfront.
- 03US officials raised concerns with Oracle; Guangdong officials urged Tencent to back China-made chips.
- 04Oracle, Tencent and the White House did not respond to requests for comment.
- 05Oracle recently priced a $20B funding round with interest of up to 8.65% to fund its AI cloud buildout.
Oracle, Tencent and the White House did not respond to requests for comment, and other news organizations said they could not immediately verify the report. Neither company has publicly confirmed the cancellation.
The lease was first reported last month. Renting compute abroad has become a route for Chinese AI developers facing tight domestic supply and tightening US export controls. ByteDance, Alibaba and Tencent have also placed large orders for the Nvidia chips they are permitted to buy.
The cancellation follows a separate report on Tuesday that Nvidia told its cloud partners to cap Chinese business at 49% of their capacity. That requirement was directed at cloud and neocloud customers in Singapore, Malaysia and Japan, with enforcement that includes data center inspections and contract audits.
For Oracle, the Tencent contract would have added a large customer while the company funds its AI cloud expansion partly with borrowed money. Oracle recently priced a $20 billion funding round with interest of up to 8.65%, and its shares have roughly halved over the past year.
Tencent, for its part, has been increasing its spending on computing power to catch up with Chinese rivals. In October it was reported to be adding AI agents across WeChat, its messaging app.
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