Oracle Cancels $7B Tencent Chip Lease, FT Reports

What happened

According to the reports, US officials approached Oracle to raise concerns about the arrangement, while officials in Guangdong visited Tencent and urged it to support domestic chipmakers. The agreement was cancelled after pressure from both sides. The reports also note that remote-leasing arrangements of this kind are not prohibited under existing rules, and no public ban or enforcement order has been tied to the cancellation.

The agreement had already been signed: Tencent was to rent computing capacity across several Oracle data centers in Southeast Asia for five years, worth about $7 billion, with an upfront payment reported at roughly 30% of the contract value, about $2.1 billion. The chips in question cannot be used directly in China under US export controls and related Chinese policies, so the lease had been a channel for Tencent to access computing capacity abroad. As of the reports, Oracle, Tencent and the White House had not immediately responded to requests for comment, and Reuters said it could not independently verify the cancellation.

A day before the cancellation report, the Financial Times reported that Nvidia had told cloud customers that at least 51% of their services must be sold to non-Chinese companies. Separately, Oracle reportedly still holds other major contracts with Chinese companies including ByteDance, leaving the future of the remote-leasing model open.

Key facts

1. Deal size: Five years, about $7 billion, up to 100,000 advanced AI chips housed in Oracle data centers in Southeast Asia
2. Upfront payment: Reported at roughly 30% of the contract value, about $2.1 billion
3. US side: Officials raised concerns with Oracle; no public ban has surfaced
4. Chinese side: Guangdong officials visited Tencent and urged support for domestic chips
5. Verification status: Oracle, Tencent and the White House did not immediately respond; Reuters said it could not independently verify
6. Same-week link: Nvidia reportedly requires cloud customers to sell at least 51% of services to non-Chinese companies