Oracle has canceled a five-year deal with Tencent worth an estimated $7 billion, after US officials raised concerns about the agreement, according to people familiar with the matter. The contract would have given the Chinese technology group access to as many as 100,000 advanced artificial intelligence chips across data centers in Southeast Asia.
The deal would have been Tencent’s largest overseas agreement to rent computing capacity. It was intended to provide access to chips whose use in China is restricted under rules imposed by Washington and Beijing.
The sources said US authorities contacted Oracle to express concern about the arrangement. Senior officials from Guangdong, the Chinese province where Tencent is based, also visited the company and urged it to support domestic chipmakers, one of the sources said. The agreement was subsequently canceled.
Oracle, Tencent and the White House did not respond to requests for comment, according to the report.
Chinese technology companies have increasingly sought computing capacity abroad as domestic supply remains limited and US export controls tighten. Renting capacity overseas can provide access to advanced Nvidia processors unavailable in China, which Chinese companies and AI labs use particularly to train their systems.
Although such overseas rental agreements are permitted under current rules, US companies face growing pressure to limit their exposure to Chinese customers. The Financial Times reported that Nvidia had told cloud-computing customers they must now sell at least 51% of their services to companies outside China.
Tencent has been increasing its infrastructure investment as it works to narrow its gap in artificial intelligence. Its latest Hunyuan models have made significant performance gains, according to the report. ByteDance and Alibaba remain the largest data-center customers in Southeast Asia, while Oracle is also a major supplier to ByteDance in the region, including through data centers in Malaysia.
Sources: Folha Mercado.