Oracle has cancelled the Oracle Tencent chip deal, a $7 billion agreement to lease AI chips to Tencent, after pressure from the Trump administration, the Financial Times reported on Wednesday.
The five-year contract would have given Tencent access to as many as 100,000 advanced AI chips across data centres in Southeast Asia. It was Tencent’s largest overseas chip leasing arrangement, and the agreement was first reported by the Financial Times in September. The deal was never formally announced by either company.
United States officials approached Oracle to raise concerns about the agreement, according to the Financial Times, which cited two people familiar with the matter. The contract would have let Tencent use advanced processors restricted in China under United States export controls and Beijing’s policies.
Oracle Tencent chip deal scrapped after US pressure
Reuters could not immediately verify the report. Oracle, Tencent and the White House did not respond to Reuters’ requests for comment on the report. The Financial Times account rests on two unnamed sources, so details of what officials said and how Oracle responded are not independently confirmed.
Tencent also received visits from senior officials in Guangdong, where the company is based, who encouraged it to support domestic Chinese chip suppliers. The two sets of pressure left the Oracle Tencent chip deal caught between Washington and Beijing.
Chinese technology companies have increasingly turned to overseas data centres to secure computing capacity for training AI models. Demand for overseas chip leasing has grown as export controls tightened on shipments of advanced Nvidia processors to China, including through intermediary locations.
Those controls have contributed to higher prices, longer contract terms and larger upfront payments for data centre leases. The Financial Times also reported that Nvidia had told cloud computing clients they must sell at least 51 percent of their services to non-Chinese companies.
Oracle Tencent chip deal was worth $7 billion
Oracle shares fell more than 2 percent in overnight trading after the report, and closed 1.92 percent lower at $123.77 on Wednesday. Oracle stock had traded slightly higher earlier on Wednesday before the reports weighed on the shares. In premarket trading, the reports of the scrapped deal renewed attention on how Oracle funds its AI buildout.
The Oracle Tencent chip deal was also expected to help Oracle diversify its customer base beyond a relatively small number of large clients. Its reliance on cloud contracts with OpenAI has been cited by investors as a possible risk.
ByteDance and Alibaba remain among the biggest customers of data centres in Southeast Asia, while Tencent has been increasing its infrastructure spending as it develops its AI capabilities. Oracle is a major supplier to ByteDance in Asia, operating multiple data centres in Malaysia.
Oracle Tencent chip deal fallout for cloud firms
Oracle previously hosted United States customer data for TikTok before joining a consortium that acquired the social media platform’s United States operations late last year. The Oracle Tencent chip deal would have added a second large Chinese customer to its Asian data centre business.
Tencent’s latest Hunyuan models have shown performance improvements, narrowing the gap with leading domestic models such as Alibaba’s Qwen. The company needs computing capacity to keep training those models, and the cancelled lease would have supplied it.
The cancellation of the Oracle Tencent chip deal adds uncertainty to Oracle’s efforts to expand its AI infrastructure business, particularly as Chinese companies seek computing resources unavailable in their domestic market. It also shows how far Washington will go to police access to advanced chips beyond its borders.
The Oracle Tencent chip deal was cancelled as United States authorities increase scrutiny of arrangements that allow Chinese companies to access advanced computing infrastructure outside China. The Financial Times first reported the deal in September, and neither company formally announced it at the time.
Neither company has confirmed the cancellation in public, and no details have emerged about termination payments or how Tencent will replace the computing capacity. The reported intervention should not be treated as an official announcement of a new export control rule.
Oracle reported first-quarter revenue of $19.35 billion, up 30 percent and above Wall Street expectations of $19.14 billion. It secured more than $30 billion in additional AI cloud contracts during the quarter, lifting its remaining performance obligations, or backlog, to $664 billion, a scale that shows why the Oracle Tencent chip deal mattered to both sides.