Oracle cancels $7 bln chip leasing deal with Tencent, FT reports

 Oracle has scuttled a $7 billion chip leasing contract with Tencent amid increased pressure from the Trump administration, the Financial Times reported on Wednesday. 

The Larry Ellison-led cloud firm had earlier this year signed a five-year lease with Tencent, granting the Chinese internet giant access to as many as 100,000 advanced artificial intelligence chips in data centers across southeast Asia, the FT reported.

But the contract was canceled after U.S. officials raised concerns with Oracle about the Tencent deal, the FT reported, citing two people familiar with the matter. Tencent was also scrutinized by Beijing over the deal, and was asked to seek domestic chips. 

The cancellation comes amid continued U.S. scrutiny of Chinese access to advanced AI chips, as Washington vies to maintain its lead in the AI race while also keeping Chinese development in check. 

The FT reported on Tuesday that Nvidia told its cloud computing clients they must now sell at least 51% of their capacity to non-Chinese companies. 

But Chinese internet giants ByteDance and Alibaba still have massive chip leasing deals with U.S. providers. Oracle is a major supplier to ByteDance in Asia with several data centers in Malaysia.