Oracle cancels a $7 billion chip-leasing deal with Tencent under pressure from the Trump administration

Oracle has cancelled a $7bn AI chip-leasing deal with Tencent under pressure from the Trump administration¹. The Financial Times first reported the cancellation⁶. Oracle scrapped the multibillion-dollar contract after bowing to pressure from Washington⁷.

Earlier this year Oracle, which is led by billionaire Larry Ellison, had signed a five-year lease with Tencent to provide access to as many as 100,000 advanced chips^5,6. The arrangement was a lease that granted the Chinese internet giant access to the chips as a cloud client of Oracle, not a sale of hardware^4,6. The move means Oracle drops Tencent as a cloud client and loses a multibillion-dollar contract⁴. Oracle shares fell more than 1% in pre-market trading on the reports³.

Why it matters to investors

The cancellation comes amid growing pressure to reduce US companies’ ties to Chinese customers⁴. US export controls restrict certain advanced AI chips from entering China, and that, combined with a limited domestic supply of advanced chips, has left Chinese companies looking for capacity outside the country^1,3.

Demand from Chinese AI companies in south-east Asia has intensified as tighter export controls keep Nvidia’s advanced chips out of China¹. Chinese tech firms are among the biggest customers of Southeast Asian data centres².

For Oracle, the cancellation removes a contract worth about $7 billion, a deal that covered as many as 100,000 advanced chips over five years^3,5. For operators of data centres in south-east Asia that serve Chinese customers, the case signals that leasing arrangements with Chinese technology groups can be unwound under US pressure even after contracts are signed^2,4.

What to watch

The open question is whether other US cloud providers face similar pressure over their Chinese clients, given the push to reduce US companies’ ties to Chinese customers⁴. Tencent’s response, and where it turns for the computing capacity the five-year lease would have supplied, will show how Chinese demand shifts after the cancellation^1,5.

Investors will also look at whether the Trump administration applies the same pressure to other leasing deals between US providers and Chinese technology groups^1,7. Oracle’s shares, down more than 1% before the open, are the immediate gauge of how the market values the lost contract³.