Trump administration officials went to Oracle with concerns about its chip leasing contract with Tencent, and the deal has since been cancelled, two people familiar with the matter told the Financial Times.
The five-year lease, worth an estimated $7 billion, would have given the Chinese tech giant access to as many as 100,000 advanced AI chips across a string of Oracle data centers in Southeast Asia, chips it can't use at home because of curbs from both Washington and Beijing. It was Tencent's largest overseas leasing deal. Top officials in Guangdong, where Tencent is based, also visited the company and asked it to back domestic Chinese chips, according to one of the people.
Overseas leasing deals like this one are allowed under existing rules, as the FT notes, so no regulation forced Oracle's hand. The contract was cancelled after officials raised their concerns with a company led by billionaire Trump backer Larry Ellison.
The cancellation landed a day after the FT reported that Nvidia has told data center and cloud customers that at least 51% of their services must go to non-Chinese companies, a requirement five people said it had never imposed before and has delivered verbally. That rule covers only new contracts and leaves existing agreements alone. Tencent's lease was signed earlier this year, so Oracle walked away from a contract Nvidia's own rule would have left in place.
In a statement to AFP, Nvidia said: "America cannot win the AI race unless America's AI infrastructure wins worldwide." Meanwhile, Chinese foreign ministry spokeswoman Mao Ning said she was not aware of the report. One Singapore-based cloud group told FT it is hard to find enough non-Chinese customers outside the US.
Washington has spent most of the year trying to close the remote access loophole: US export controls cover where a chip is shipped, not who rents time on it abroad. The Remote Access Security Act, which would put remote access under export-control law, passed the House 369-22 in January and then stalled in the Senate Banking Committee. Commerce has been drafting its own rule to block Chinese firms from renting Nvidia compute through data centers in countries such as Thailand and Singapore, The Information reported in August, though export-control lawyers told the outlet the agency lacks clear authority to regulate remote access under current law.
As we noted Last December, Trump cleared Nvidia to ship its H200 chips to approved customers in China, with the US taking a 25% cut. Beijing has pushed its companies the other way: a month earlier it ordered new state-funded data center projects to use only domestically made AI chips, as we noted at the time.
Oracle walks away from the contract two days after raising $20 billion - $10 billion in bonds and $10 billion in stock, using up the entire cap on new capital it had set for fiscal 2027 through 2030 at its investor day the week before, as we reported Monday.
When FT revealed the Tencent lease, Tencent was paying about 30% of the estimated $7 billion upfront, roughly $2.1 billion, and the FT said the deal had already weighed on Tencent's free cash flow in the second quarter. Neither company has said what becomes of that money now.
ByteDance and Alibaba remain the biggest clients of Southeast Asia's data centers, and Oracle is a major supplier to ByteDance in Asia, with multiple data centers in Malaysia. Oracle also hosted the US customer data for ByteDance's TikTok before joining the consortium that bought the app's US operations. Demand from Chinese AI groups in the region has pushed up prices, stretched lease terms and raised the upfront payments on these deals, as tighter US export controls stop Nvidia's advanced chips from reaching China through intermediary countries.