Oracle scraps $7 billion Tencent AI chip deal under US pressure

Oracle Corporation has terminated a major partnership arrangement with Chinese technology giant Tencent, ending plans to provide approximately 100,000 advanced AI chips through Oracle data centres located across Southeast Asia. The proposed five-year agreement, valued at $7 billion, would have given Tencent significant access to cutting-edge semiconductor technology critical for artificial intelligence applications.

The deal's abandonment reflects escalating tensions between the United States and China over semiconductor technology and artificial intelligence capabilities. The Trump administration has intensified efforts to restrict Chinese access to advanced computing chips, viewing such transfers as potential national security concerns. These restrictions form part of broader US policy aimed at limiting Beijing's technological advancement in critical sectors.

Tencent, one of China's largest technology conglomerates with interests spanning social media, gaming, and cloud computing, had sought the partnership to expand its AI infrastructure capabilities. The Southeast Asian data centre arrangement was designed to circumvent some existing US export restrictions, though ultimately proved unsustainable under current geopolitical pressures.

The decision underscores the growing complexity of technology sector operations across Asia, where multinational firms must balance commercial opportunities with government regulatory requirements and strategic trade policies. Oracle's move signals how US technology restrictions continue reshaping investment and partnership strategies throughout the region.