Oracle has reportedly terminated a significant $7 billion agreement to lease artificial intelligence (AI) chips to Chinese technology giant Tencent, following objections from the Trump administration. The deal, which aimed to provide Tencent access to up to 100,000 AI chips over five years through Oracle's Asia-based data centers, was met with pushback from US officials concerned about the escalating race for AI supremacy between the United States and China.
According to a report citing sources familiar with the matter, US export controls would normally prevent Tencent from acquiring such advanced chips. The Trump administration officials conveyed their concerns to Oracle about the arrangement, ultimately leading to its cancellation. This move underscores the intensifying geopolitical tensions surrounding advanced technology and national security.
Adding another layer to the situation, Chinese government officials reportedly had also urged Tencent to prioritize domestic computer chips over Western alternatives. This internal pressure combined with external US government intervention appears to have sealed the fate of the chip leasing deal.
Oracle, known for its significant business ties in China, including its role in the White House-brokered deal involving TikTok's US operations, has seen its chairman, Larry Ellison, maintain close ties with the Trump administration. The report noted that US export rules already restrict the sale of high-end AI chips from companies like Nvidia to Chinese firms, prompting Chinese companies to seek alternative solutions like leasing capacity from overseas data centers.
Representatives for Oracle, Tencent, and the White House did not immediately respond to requests for comment regarding the reported cancellation of the deal.