Oracle 'dumps' $7 billion with one of China's biggest IT company after the US government reportedly tells the company: You cannot …
Oracle has reportedly abandoned a multibillion-dollar chip with China’s Tencent after bowing to pressure from the US administration. According to a report by Financial Times, the California-based company signed a five-year lease with the leading Chinese tech giant to provide access to as many as 100,000 advanced AI chips across a host of data centres in south-east Asia. The contract was first reported by FT in September. Estimated to be worth $7 billion, it was Tencent’s largest overseas leasing deal. It would have given the group access to chips unavailable for use in China due to curbs from Washington and Beijing.
As stated in the report, the US officials contacted Oracle raising concerns about the Tencent deal. People familiar with the matter told the publication that Tencent also received visits from top officials in Guangdong who asked the tech giant to support domestic Chinese chips.
The deal has since been cancelled, the people added.
Chinese AI companies turn to overseas data centres for advanced chipsChina’s limited domestic supply of advanced chips, alongside tighter US export restrictions, has pushed technology companies to seek computing resources outside the country. Overseas leasing arrangements can provide access to Nvidia’s advanced processors, which Chinese companies cannot obtain directly for use in China.
Chinese AI companies and leading AI labs are increasingly relying on these facilities to train their models, as domestic chips are not yet capable of handling such workloads at the same level.
Although overseas chip-leasing deals remain permitted under existing rules, US companies are facing greater scrutiny over their exposure to Chinese clients. The FT also reported that Nvidia has asked cloud computing providers to ensure that at least 51% of their services are sold to non-Chinese customers.
Tencent has been expanding its AI infrastructure spending as it seeks to narrow the gap with competitors. Its latest Hunyuan models have reportedly improved considerably, bringing them closer to leading Chinese models such as Alibaba’s Qwen.
Meanwhile, ByteDance and Alibaba continue to be the largest customers of data centre capacity in Southeast Asia. Oracle has a major presence in the region, including several facilities in Malaysia that serve ByteDance. It also previously hosted US user data for TikTok before joining a consortium that acquired the app’s US operations late last year.
As stated in the report, the US officials contacted Oracle raising concerns about the Tencent deal. People familiar with the matter told the publication that Tencent also received visits from top officials in Guangdong who asked the tech giant to support domestic Chinese chips.
The deal has since been cancelled, the people added.
Chinese AI companies turn to overseas data centres for advanced chipsChina’s limited domestic supply of advanced chips, alongside tighter US export restrictions, has pushed technology companies to seek computing resources outside the country. Overseas leasing arrangements can provide access to Nvidia’s advanced processors, which Chinese companies cannot obtain directly for use in China.
Chinese AI companies and leading AI labs are increasingly relying on these facilities to train their models, as domestic chips are not yet capable of handling such workloads at the same level.
Although overseas chip-leasing deals remain permitted under existing rules, US companies are facing greater scrutiny over their exposure to Chinese clients. The FT also reported that Nvidia has asked cloud computing providers to ensure that at least 51% of their services are sold to non-Chinese customers.
Tencent has been expanding its AI infrastructure spending as it seeks to narrow the gap with competitors. Its latest Hunyuan models have reportedly improved considerably, bringing them closer to leading Chinese models such as Alibaba’s Qwen.
Meanwhile, ByteDance and Alibaba continue to be the largest customers of data centre capacity in Southeast Asia. Oracle has a major presence in the region, including several facilities in Malaysia that serve ByteDance. It also previously hosted US user data for TikTok before joining a consortium that acquired the app’s US operations late last year.
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