Tencent leases 100,000 AI chips from Oracle, FT reports

Tencent Holdings has signed a five-year lease with Oracle ↗ 3.06% that gives it access to about 100,000 advanced artificial intelligence chips in Oracle data centers in Southeast Asia, the Financial Times reported, citing people familiar with the matter. The chips are not available in China. According to the report, the deal is worth about $7 billion and is Tencent's largest overseas lease. Tencent is said to have paid roughly 30% of the total upfront.finance.yahoo+2

The deal shows how much computing power China's largest technology companies are seeking abroad. Chinese firms cannot buy the most advanced chips directly, and U.S. export controls are getting tighter, but U.S. rules still let them lease that capacity in data centers outside China.tradingview+1

What the report says

Tencent agreed to the lease this year. It covers several Oracle facilities across Southeast Asia. Investing.com, which summarized the FT's reporting, said the upfront payment weighed on Tencent's free cash flow in its second-quarter results. Reuters said it could not immediately verify the report. Neither company responded to Reuters' requests for comment. Neither Tencent nor Oracle has publicly confirmed the deal.nation+2

Tencent plans to use the capacity to develop its AI models and agentic tools. It has raised infrastructure spending over the past year and is building AI agents into its ecosystem, including WeChat, which has more than 1.4 billion users.tradingview+1

Chinese demand moves offshore

The report says a shortage of computing capacity at home and stricter U.S. export controls have pushed Chinese tech groups to look overseas. Tencent now joins ByteDance and Alibaba Group ↘ 1.49%, which remain among the largest data-center clients in Southeast Asia. According to the FT, strong demand for overseas capacity has driven up prices and led to longer lease terms and larger upfront payments.tradingview+1

China's domestic chipmakers are struggling to keep up. A shortage of high-bandwidth memory has limited how many of Huawei's Ascend chips can be produced.startupfortune

A boost for Oracle

Oracle shares rose in overnight trading late Wednesday after the report. Investors have worried about how much Oracle depends on OpenAI, its debt-financed data-center buildout and whether it can turn its large backlog into revenue. The Tencent contract could help it spread that risk across more customers. Those concerns grew last week when Oracle invoked a force majeure clause tied to Project Jupiter, its planned AI campus in New Mexico. Oracle stock has fallen nearly 30% so far this year.tradingview