Tencent has signed a five-year agreement with Oracle. The deal is estimated to be worth about $7 billion and would give Tencent access to approximately 100,000 advanced AI chips unavailable in China under U.S. export controls. It is reportedly Tencent’s largest-ever overseas lease agreement.
The arrangement is intended to strengthen Tencent’s AI development and help it compete with ByteDance and Alibaba. Tencent would lease computing capacity from Oracle data centers in Southeast Asia rather than purchase the restricted hardware directly.
U.S. rules prohibit the sale of advanced AI chips to Chinese companies but do not currently prohibit them from leasing capacity at overseas data centers. Tencent reportedly made an upfront payment of about 30% of the deal’s value, which weighed on its second-quarter free cash flow.