Oracle has reportedly cancelled a multibillion-dollar agreement to lease advanced artificial intelligence chips to Chinese technology giant Tencent, after the Trump administration raised concerns about the arrangement. The move marks a significant escalation in Washington's campaign to limit China's access to cutting-edge computing infrastructure.

What the Deal Involved

The proposed five-year agreement, reportedly valued at approximately $7 billion, would have given Tencent access to around 100,000 advanced AI chips housed across multiple Oracle data centres in Southeast Asia. It was described as Tencent's largest overseas leasing arrangement, according to a report by the Financial Times.

The chips were seen as a critical workaround for Tencent and other Chinese technology firms, which have been shut out of direct purchases of high-end semiconductors by US export controls. By leasing computing capacity through Oracle's overseas network, Chinese companies could access the processing power needed to train large-scale AI models — without technically importing restricted hardware.

Why Washington Intervened

US officials reportedly approached Oracle with concerns over the leasing arrangement before it was formally concluded. While such overseas leasing deals are currently permitted under existing export control rules, American companies are facing mounting pressure to restrict commercial relationships with Chinese customers in advanced technology sectors.

This comes amid a broader and intensifying technology rivalry between the United States and China, with Washington tightening export controls on high-end chips and AI-related technologies in successive rounds since 2022. Beijing, in turn, has pushed policies aimed at strengthening domestic semiconductor capabilities.

Pressure From Both Sides

Notably, Tencent has also faced pressure from within China. Senior officials from Guangdong province — where the company is headquartered — reportedly urged the firm to prioritise domestically developed Chinese chips over foreign technology, according to the Financial Times report.

The dual pressure — from US regulators on one side and Chinese provincial officials on the other — illustrates the increasingly constrained operating environment facing Chinese tech companies seeking to build global AI capacity.

Responses and Verification

Oracle, Tencent, and the White House did not immediately respond to requests for comment on the matter. The report could not be independently verified at the time of publication.

Broader Implications for AI Computing

Chinese technology companies have increasingly turned to overseas computing facilities to train AI models, given that domestically produced chips are not yet capable of handling all such workloads at scale. The cancellation of this deal signals that even indirect access routes — through third-country data centres — are now under active scrutiny from US authorities.

As Washington's enforcement posture tightens, US cloud and infrastructure companies operating in Southeast Asia may face growing pressure to screen and potentially exit similar arrangements, reshaping the landscape for global AI infrastructure.