Oracle cancels tencent lease agreements for AI chips worth roughly $7 billion after facing direct pressure from the Trump administration, according to The Next Web reporting on a Wednesday story from the Financial Times. US officials raised concerns directly with Oracle regarding the five-year arrangement, which would have granted Tencent access to advanced hardware across Southeast Asian data centers.
Key takeaways
- Oracle scrapped an estimated $7bn chip leasing deal with Tencent.
- US officials and Beijing both applied pressure to halt the agreement.
- The arrangement would have let Tencent use roughly 100,000 advanced AI chips abroad.
- Oracle shares have dropped over the past year amid heavy spending on cloud capacity.
Why did Oracle cancel tencent lease deals?
The Financial Times reported that US officials approached Oracle with concerns about the massive AI chip lease. Under the terms of the aborted contract, Tencent planned to rent capacity inside several Oracle data centers in Southeast Asia. The company intended to pay about 30% of the value upfront to use roughly 100,000 advanced chips that remain barred from China under export rules set by Washington and Beijing.
Pressure on Tencent also materialized from within China. Senior officials from Guangdong, where Tencent is based, visited the tech firm and urged leadership to rely on domestically produced chips instead. Chinese technology companies have increasingly rented computing power abroad as domestic supply stays tight and controls tighten.
How does this affect cloud expansion and Nvidia partners?
The decision arrives immediately after a separate Financial Times report stating that Nvidia instructed cloud partners to limit Chinese business to 49% of their capacity. Both developments highlight intense scrutiny on how Chinese firms secure top-tier processors through third parties. Meanwhile, Oracle relied on the Tencent contract as part of its rapid build-out of AI cloud infrastructure, a costly expansion financed partly through heavy borrowing.
What this means for investors and tech firms next
Investors have grown cautious about Oracle spending heavily on its cloud infrastructure, leading shares to roughly halve over the past year. Tencent, on the other hand, continues to spend heavily on computing power to keep pace with local rivals and integrate AI agents across its WeChat app. With the deal now scrapped, both companies must navigate stricter international rules and closer oversight from global governments.
Frequently asked questions
The chip leasing deal between Oracle and Tencent was valued at an estimated $7 billion.
The deal was cancelled after the Trump administration raised concerns with Oracle, and senior officials from Guangdong province in China urged Tencent to use domestically made chips.
The agreement would have allowed Tencent to use about 100,000 advanced AI chips that cannot be purchased inside China due to export controls.
Nvidia reportedly told its cloud partners to cap Chinese business at 49% of their total capacity.
Oracle's shares have roughly halved over the past year as investors weigh its AI growth against the heavy costs of paying for expansion.
Based on reporting by The Next Web. Read the original article
