Oracle has reportedly cancelled a $7 billion (£5.3 billion) artificial intelligence computing deal with Chinese technology giant Tencent following pressure from Donald Trump's administration. The decision has halted a planned agreement that would have given Tencent access to approximately 100,000 advanced AI chips in Southeast Asian data centres.
The five-year agreement was abandoned after US officials raised concerns about Tencent's access to American technology, according to the Financial Times.
The cancellation, reported on Wednesday, 4 November, raises questions about whether Chinese AI developers can continue relying on overseas computing infrastructure as Washington increases its scrutiny of advanced semiconductor technology.
Reuters said it could not independently verify the report. Oracle, Tencent and the White House did not respond to its requests for comment.
How Tencent Planned to Access 100,000 AI Chips Overseas
Tencent had reportedly agreed to lease computing capacity across several Oracle data centres in Southeast Asia. The agreement, detailed in earlier Financial Times reporting, was estimated to be worth $7 billion (£5.3 billion) over five years.
It would have been Tencent's largest overseas computing lease, providing access to approximately 100,000 advanced AI processors. Rather than purchasing the chips, Tencent planned to rent computing power to develop and operate its artificial intelligence systems.
The arrangement offered an alternative to importing restricted hardware into mainland China. Washington has imposed export controls on certain advanced American semiconductors, limiting their availability to Chinese technology companies.
Overseas cloud services provide another route to powerful computing infrastructure. Such arrangements are not automatically prohibited under US export controls, although applicable licensing requirements and other restrictions remain relevant.
Trump Administration Pressures Oracle as Beijing Pushes Domestic Chips
US officials approached Oracle to express concerns about the Tencent agreement, the Financial Times reported, citing two people familiar with the matter. Oracle subsequently abandoned the deal, according to the newspaper.
The reviewed reporting does not identify a formal US government order requiring Oracle to cancel the agreement.
Tencent was also facing pressure from Chinese authorities. Senior officials from Guangdong province, where the company is headquartered, reportedly visited the technology group and urged it to support domestic semiconductor manufacturers.
The developments placed Tencent between competing priorities. Washington is seeking to restrict China's access to advanced American computing technology, while Beijing is encouraging domestic companies to rely more heavily on Chinese chipmakers.
Oracle's reported decision illustrates how commercial agreements can become caught in the wider US-China technology rivalry.
Nvidia's New Guidance Adds to China's AI Chip Challenge
Oracle's reported withdrawal comes as Nvidia, another major American technology supplier, faces scrutiny over how its advanced processors are accessed through overseas cloud providers.
On 3 November, the Financial Times reported that Nvidia had instructed cloud computing partners to sell at least 51% of their services to non-Chinese customers. The guidance reportedly applies to future contracts rather than existing agreements.
However, The Information reported that the guidance was not mandatory and had not been enforced as a strict requirement.
There is no confirmed evidence that Nvidia's guidance caused Oracle to abandon the Tencent agreement.
Separately, Washington has clarified licensing requirements for advanced processors supplied to certain Chinese-linked entities overseas.
On 31 May 2026, the US Commerce Department's Bureau of Industry and Security reaffirmed existing licensing requirements for specified advanced computing items destined for entities headquartered in designated jurisdictions, including China.
The requirements can also cover overseas entities whose ultimate parent companies are based in those jurisdictions.
The guidance addresses controlled hardware exports. It does not establish a blanket prohibition on remotely renting cloud computing services. It also states that compliant data-centre operators are not required to cease ongoing use of covered equipment solely because of the guidance.
This distinction matters because Oracle's reported cancellation has not been publicly established as the result of an unlawful transaction.
Could Other Chinese AI Companies Lose Overseas Chip Access?
Tencent is not the only Chinese technology company using computing infrastructure outside mainland China. ByteDance and Alibaba are also major customers of Southeast Asian data centres, according to the Financial Times.
Overseas facilities allow Chinese developers to access computing resources without directly importing processors into China. These arrangements have become increasingly important as companies expand their AI operations.
Oracle's reported withdrawal could prompt other American cloud providers to review similar agreements. However, there is no confirmed evidence that contracts involving ByteDance or Alibaba have been cancelled because of the reported US intervention.
For Tencent, the immediate challenge is securing alternative computing capacity. The company has invested heavily in AI infrastructure to develop its Hunyuan models and expand AI-powered services.
Losing a planned lease involving approximately 100,000 advanced processors could complicate those ambitions. However, the financial consequences, potential replacement arrangements and any resulting development delays remain unconfirmed.
The wider concern extends beyond Tencent. Oracle's reported decision suggests that Chinese AI developers could face greater uncertainty when seeking computing capacity overseas, even where cloud arrangements are not expressly prohibited.
Access to advanced American AI technology may increasingly depend on commercial decisions influenced by Washington's scrutiny.
