Oracle cancels Tencent’s $7 billion AI chip lease

The Financial Times described the agreement as Tencent’s largest overseas lease.[1] It was to run for five years across multiple Oracle data centres in Southeast Asia and was estimated to be worth $7 billion.[1][2] The deal involved about 100,000 advanced AI chips that Tencent could not buy in China, and Tencent was expected to pay roughly 30% of the lease’s value upfront.[1]

According to the Financial Times, US officials raised concerns with Oracle about the arrangement, and pressure from the Trump administration preceded the cancellation.[1] Officials from Guangdong, where Tencent is based, also urged the company to support Chinese-made chips.[1] The chips in the proposed lease were unavailable for Tencent to buy in China, with US and Chinese rules keeping them out of the country, the report said.[1] The account therefore describes regulatory and political pressure from both countries around Tencent’s access to overseas computing capacity.

Chinese technology companies have turned to renting computing power abroad as domestic supply remains short and US export controls tighten.[1] ByteDance, Alibaba and Tencent had also placed large orders for Nvidia chips they were allowed to buy.[1] The Financial Times reported that Nvidia had told its cloud partners to limit Chinese business to 49% of their capacity.[1] It said the Oracle cancellation and Nvidia’s move pointed to closer US scrutiny of Chinese firms accessing advanced chips through third parties.[1]

The Tencent agreement was one of several large, long-term contracts supporting Oracle’s expansion of AI cloud capacity.[1] Oracle was financing part of that expansion with borrowed money and had recently priced a $20 billion funding round with interest of up to 8.65%.[1] Its shares had roughly halved over the past year as investors weighed AI growth against its costs.[1] Tencent, meanwhile, had been increasing spending on computing power to catch up with Chinese AI rivals, and the Financial Times reported it was adding AI agents across WeChat.[1] Reuters said it could not immediately verify the report.[1]