Oracle has reportedly cancelled a multibillion-dollar agreement to lease advanced artificial intelligence (AI) chips to Chinese technology company Tencent following pressure from the US administration.
According to a Financial Times report, US officials approached Oracle with concerns about the proposed arrangement. The deal would have given Tencent access to advanced AI chips through Oracle’s overseas data centre network.
The development highlights growing scrutiny in Washington over China’s access to advanced computing technology amid the technology rivalry between the two countries.
Proposed deal valued at around USD 7 billion
The agreement, first reported by the Financial Times last month, was estimated to be worth around USD 7 billion. It was described as Tencent’s largest overseas chip-leasing arrangement.
Under the proposed five-year agreement, Tencent was expected to access around 100,000 advanced AI chips housed across multiple Oracle data centres in Southeast Asia.
The computing capacity was intended to support Tencent’s AI development and model training requirements.
Overseas data centres have become an important route for Chinese technology companies seeking access to advanced computing resources. Domestic restrictions and limitations in chip capabilities have constrained their access to some high-end semiconductor technologies.
US-China technology tensions weigh on chip access
Washington has imposed export controls on advanced semiconductors and AI-related technologies to restrict China’s access to high-end computing capabilities.
Beijing, meanwhile, has pursued policies to strengthen its domestic semiconductor industry and develop alternatives to foreign technology.
The proposed Oracle-Tencent arrangement drew attention because it could have provided Tencent with access to advanced chips through facilities outside China.
Although overseas chip-leasing arrangements are currently permitted under existing rules, US companies face increasing pressure to limit technology-related business with Chinese customers.
Tencent faces pressure to use domestic chips
Tencent has reportedly faced pressure from Chinese authorities as well.
According to the Financial Times report, senior officials in Guangdong province, where Tencent is headquartered, urged the company to support the use of domestically developed Chinese chips rather than rely on foreign technology.
The chips involved in such arrangements are primarily used to train AI models. Chinese companies have been using overseas computing facilities because domestic processors are not yet able to meet all their advanced computing requirements.
Reuters said it could not independently verify the report. Oracle, Tencent and the White House did not immediately respond to requests for comment.
