Oracle drops $7B Tencent deal under Trump pressure: FT

Oracle ↗ 5.85% has cancelled a deal worth about $7 billion to lease advanced AI chips to Tencent after pressure from the Trump administration, the Financial Times reported on November 4. The paper said the move "comes amid growing tension for US AI infrastructure groups doing business with Chinese tech giants." Reuters Thomson Reuters Corporation ↘ 9.87% carried the FT's report in a flash headline. Neither company has publicly confirmed the cancellation, and they never confirmed the original agreement either.ft.com+1

The cancellation shuts one of the largest known routes a Chinese company has used to reach US chips it cannot legally import. It also comes a day after reports that Nvidia ↗ 2.29% is tightening how its own partners serve Chinese clients.

The deal that unraveled

The FT first reported the arrangement on September 30. It described a five-year lease, Tencent's largest overseas deal of its kind, that would give the company access to about 100,000 advanced AI chips in Oracle data centers in Southeast Asia, chips not available in China, according to Reuters. Reuters said at the time that it could not verify the report. Tencent was to pay about 30% of the $7 billion up front, according to Investing.com's summary of the FT story.finance.yahoo.com+1

The lease was legal under US rules. Export controls cover physical shipments of chips, but leasing remains a loophole, Tom's Hardware noted. The outlet added that the Commerce Department was reportedly drafting a rule to stop Chinese firms from renting computing power in third countries.tomshardware.com

Nvidia tightens its own rules

On November 3, the FT reported that Nvidia had told cloud partners worldwide that they must sell at least 51% of their services to non-Chinese companies, according to AFP's account via Tech Xplore. The rule covers only new contracts, not existing ones. The Next Web reported, citing the FT, that Nvidia passed the instruction on verbally through its sales and regional teams. Nvidia neither confirmed nor denied the report to AFP.thenextweb.com+1

In a statement, Nvidia said "datacenters and clouds built on American chips are the foundation that American model and application makers need to compete worldwide," and that US policy "encourages every cloud to build on American infrastructure and to win business everywhere they can," Türkiye Today reported.turkiyetoday.com

Pressure on overseas compute

Chinese companies have increasingly rented computing capacity abroad to train AI models, often in Southeast Asia, where they make up a large share of demand, Coinpaper noted. When the FT reported the Nvidia guidance, Chinese foreign ministry spokeswoman Mao Ning said she was not aware of it, according to one roundup. For US cloud providers, the dispute pits lucrative Chinese contracts against a government increasingly unwilling to tolerate them.coinpaper.com+1