Oracle Cancels $7 Billion Tencent AI Chip Lease Under US Pressure

Oracle has scrapped a chip leasing deal with Tencent worth an estimated $7 billion after the Trump administration leaned on it, according to a Financial Times report published Wednesday. US officials raised concerns with Oracle, the newspaper said, citing people familiar with the matter. Reuters said it could not immediately verify the report, and Oracle, Tencent and the White House did not answer Reuters' requests for comment.

Deal details

The FT first reported the lease last month, calling it Tencent's largest overseas lease. Under the five-year agreement, Tencent was to rent capacity in several Oracle data centres in Southeast Asia and pay about 30% of the value upfront. The lease would have let Tencent use about 100,000 advanced AI chips it cannot buy at home. Rules set by both Washington and Beijing keep those chips out of China.

Pressure from both sides

Pressure also came from Beijing. Senior officials from Guangdong, the province where Tencent is based, visited the company and urged it to back chips made in China, the FT reported. Chinese tech firms have turned to renting computing power abroad as supply at home stays short and US export controls get tighter. ByteDance, Alibaba and Tencent have also placed large Nvidia orders for chips they are allowed to buy.

Wider scrutiny

The cancellation follows an FT report on Tuesday that Nvidia told its cloud partners to cap Chinese business at 49% of their capacity. Both moves point to closer US scrutiny of how Chinese firms reach top AI chips through third parties.

Oracle and Tencent plans

For Oracle, the Tencent contract was one of several large, long-term deals behind its fast build-out of AI cloud capacity. The company is paying for that expansion partly with borrowed money and recently priced a $20 billion funding round, with interest of up to 8.65%. Investors have grown wary of that spending, and Oracle's shares have roughly halved over the past year as the market weighs its AI growth against the cost of paying for it. Tencent, meanwhile, has been spending more on computing power to catch up with Chinese rivals in AI, and is also adding AI agents across its WeChat app, the FT reported in October.

Sources: The Next Web · The Economic Times