Oracle Tencent Chip Deal Scrapped After US Pressure, FT Reports

Oracle has canceled a five-year Oracle Tencent chip leasing contract worth about $7 billion after the Trump administration raised concerns about it, the Financial Times reported on Wednesday, November 4. The deal would have given Tencent remote access to as many as 100,000 advanced AI chips housed in Oracle data centers across Southeast Asia.

According to the report, which cited people familiar with the matter, US officials approached Oracle directly to question the arrangement before it was dropped. Tencent was facing pressure from the other side too: senior officials from Guangdong province, where the company is based, reportedly visited Tencent and asked it to back domestic Chinese chips instead. Reuters said it could not immediately verify the FT story, and Oracle, Tencent and the White House did not respond to requests for comment.

What the Oracle Tencent Deal Covered

The contract was first revealed by the FT in late September, when Reuters summarized it as Tencent’s largest overseas lease. Tencent agreed to rent capacity across multiple Oracle sites in Southeast Asia for five years, with roughly 30% of the estimated $7 billion paid upfront. The chips involved were not available in China because of restrictions from both Washington and Beijing.

Renting compute abroad is how many Chinese AI companies have kept training large models despite US export controls. The practice is still legal under current rules, since the chips never physically enter China. That is exactly why it has become a political target.

Part of a Wider Squeeze on Rented AI Compute

The cancellation lands one day after the FT reported that Nvidia now requires its cloud customers to sell at least 51% of their capacity to non-Chinese companies, a rule aimed squarely at this kind of offshore leasing. Together, the two moves suggest the loophole that let Chinese firms tap top-end Nvidia hardware through third countries is closing quickly.

Chinese buyers are still trying to secure hardware they can legally import. This week Bloomberg reported that Alibaba, Tencent and ByteDance had ordered about 6 million Nvidia RTX Pro 5500 cards worth $70 billion, but expect only a tiny fraction to arrive within four months.

Other large leasing relationships remain in place for now. ByteDance and Alibaba still rent significant capacity from US providers, and Oracle is a major supplier to ByteDance in Asia through several data centers in Malaysia.

What It Means for Oracle

For Oracle, losing a $7 billion customer is painful at a moment when it is spending heavily on AI infrastructure. The company recently moved to raise $10 billion in stock and $10 billion in bonds to fund its data center buildout, and investors are watching closely whether that capacity can be filled with paying customers.

For Tencent, the setback adds pressure to lean on domestic accelerators from suppliers such as Huawei, as Beijing has been urging its tech giants to do. Neither company has confirmed the cancellation, so the details may change if Oracle or Tencent comment.