Tencent signs $7 billion deal with Oracle to use AI chips in Southeast Asia

Tencent has signed a $7 billion deal to access around 100,000 AI processors in Oracle’s Southeast Asian data centers, the Financial Times reported on October 1. The five-year agreement includes an upfront payment of about 30% of the total value, according to reports cited by Anadolu Agency. The companies have not yet issued a joint statement on the deal.

Chips remain outside China

The deal focuses on renting computing power abroad, not on physically moving chips to China. The equipment stays in Oracle’s regional facilities, allowing the Chinese tech giant to use components that, according to the report, are unavailable in its domestic market. This practice is permitted under U.S. rules, which distinguish between exporting hardware and providing cloud services.

The battle for infrastructure access

The U.S. has imposed restrictions on exporting advanced chips and manufacturing equipment to limit China’s access to strategic technologies, citing national security concerns. Tencent’s case shows that banning the shipment of components is different from restricting access to the services they run.

What does Tencent need this capacity for?

The contracted capacity will initially be used to train larger models in the Hunyuan family and later to run these systems. In the future, Tencent Cloud may offer this service to other customers. Oracle is also involved in other AI infrastructure projects and was mentioned by Arm in June as a customer for its data center processors.

Frequently Asked Questions

Will the chips be sent to China? The agreement only provides for remote access to equipment in Oracle’s Southeast Asian data centers, with no import to Chinese territory.

What is the value of the contract? Approximately $7 billion over a five-year period, according to the Financial Times.