Oracle Scraps $7 Billion Chip Leasing Deal With Tencent

Oracle has canceled a $7 billion deal to lease AI chips to Tencent after the Trump administration objected, the Financial Times reported, citing two sources familiar with the matter. The arrangement would have given the Chinese technology group access to up to 100,000 advanced AI chips hosted at Asia-based data centers over a five-year term.

The deal, struck under Oracle chairman Larry Ellison, tested the boundaries of US export controls. Those rules bar the sale of the most advanced Nvidia AI chips to Chinese firms. Leasing capacity from overseas data centers, rather than buying hardware outright, had emerged as a workaround — and Tencent was its most prominent customer-in-waiting.

Why did the administration object?

Officials told Oracle they were concerned about the arrangement as the United States and China remain locked in what the report describes as a winner-takes-all race for AI dominance. The deal was ultimately canceled. Representatives for Oracle, Tencent and the White House did not immediately return requests for comment.

The intervention carries a certain irony. Ellison is a major Trump ally, and Oracle has cultivated close ties to China through ByteDance. The California-based company was part of the group of US investors that acquired the majority of TikTok's US operations last year, in a deal brokered by the White House itself.

Political alignment, it turns out, does not buy an export-license exemption.

What pressure came from the Chinese side?

Beijing applied pressure of its own. Chinese government officials urged Tencent to use domestic computer chips rather than Western counterparts, according to the report. Tencent therefore sat between two governments, each pulling toward different silicon.

The squeeze reflects a broader pattern. Since US export rules cut off Chinese firms from Nvidia's most advanced AI chips, companies such as Tencent have pursued leasing deals for chip capacity at data centers outside American jurisdiction. That channel now looks narrower.

What does the cancellation signal?

For Oracle, the abandoned contract removes a reported $7 billion in potential leasing revenue and narrows a business model that had grown around exactly this kind of arrangement. For Chinese AI developers, it closes one of the few remaining routes to top-tier compute that does not run through restricted sales.

Neither company has confirmed the figures, and the Financial Times attribution rests on two unnamed sources. But the direction of policy is clear: Washington intends to police compute access by function, not merely by point of sale. Expect further scrutiny of data-center leasing structures as both governments push their champions toward domestic supply.

The losers in the middle are the customers.