Oracle has called off a $7 billion deal to lease artificial intelligence chips to Tencent, according to GuruFocus, after US officials questioned the arrangement.
The five-year contract, disclosed in September, would have given the Chinese technology company access to roughly 100,000 high-end AI processors through Oracle data centers in Southeast Asia, and was described as Tencent's largest overseas chip-leasing transaction.
Routing the chips through Southeast Asia rather than mainland China mattered because it could have let Tencent use processors otherwise restricted or unavailable for deployment inside China under existing export controls.
Tencent had also faced separate pressure from officials in Guangdong, its home region, to favor domestically produced Chinese chips over foreign hardware.
The agreement reportedly included an upfront payment of about 30% of its value, which GuruFocus's report put at roughly $2.1 billion, though it remains unclear whether Oracle will retain any advance funds already paid.
The collapse came roughly a month after the deal's disclosure and strips Oracle of a sizeable contracted revenue stream just as the company ramps up spending on AI computing capacity.
This includes a Texas facility Oracle has described as a 1.2-billion-watt data center housing 500,000 Nvidia GPUs.
It also raises the question of whether other offshore customers serving Chinese clients face similar scrutiny.
The next marker will be whether Oracle discloses the financial impact or details plans to replace the lost capacity with other client commitments.
