Deal gives Tencent access to roughly 100,000 high-performance AI chips unavailable in China

Oracle. [Reuters]
Oracle. [Reuters]

Chinese tech giant Tencent has struck its largest-ever overseas leasing deal with US cloud company Oracle, seeking to stay competitive in the AI race amid continued US export controls on advanced AI chips bound for China.

The Financial Times reported Thursday, citing sources, that the Chinese social media and gaming company signed a five-year agreement this year to lease multiple Oracle data centers across Southeast Asia.

The deal will give Tencent access to roughly 100,000 high-performance AI chips that are difficult to procure inside China. The company is expected to use the computing capacity to improve its own AI models and speed up development of AI agents capable of performing complex tasks autonomously.

The contract is valued at $7 billion, with Tencent having paid roughly 30 percent of the total upfront.

The upfront payment and related outlays pushed Tencent's free cash flow into a deficit of 13.8 billion yuan in the second quarter — its first quarterly deficit in more than a decade.

US export controls on advanced technology bar Chinese tech companies from purchasing high-performance Nvidia chips, but leasing data centers abroad remains permitted.

Chinese companies and advanced AI research institutions are increasingly tapping overseas resources for tasks such as training AI models that domestic chips cannot yet handle, the Financial Times reported.


mokiya@heraldcorp.com