Tencent leases 100,000 chips from Oracle for $7 bln- FT

 Tencent signed a $7 billion lease deal with Oracle to gain access to about 100,000 advanced artificial intelligence chips, as the Chinese internet giant races to catch up in the AI race, the Financial Times reported on Thursday.

Tencent (HK:0700) agreed to a five-year lease across multiple Oracle (NYSE:ORCL) data centers in southeast Asia, the FT reported, citing two people with knowledge of the matter.

The deal is Tencent’s largest ever overseas lease agreement, and grants the internet and videogame giant access to about 100,000 advanced chips that were not available in China, the FT report said. 

The deal is worth $7 billion with upfront payment of about 30%, the FT report said, and weighed on Tencent’s free cash flow in its second quarter earnings.

Tencent is racing to advance its AI models and products so it can better compete with advanced offerings from other major Chinese AI labs. The company was also seen integrating AI into its other products, such as WeChat. 

While China’s tech companies are blocked from directly buying advanced AI chips, they are allowed to lease them internationally under U.S. rules, granting them access to advanced Nvidia chips not usually available in China. 

Tencent’s latest Hunyuan models have displayed substantial improvements in recent months, and were seen closing the gap with leading domestic models, such as those from DeepSeek and Alibaba Group Holding Ltd (HK:9988).

The company was seen spending heavily on its AI plans over the past year, albeit at the expense of its margins and profitability.