Tencent scores 100,000 offshore AI chip deal with Oracle for $7 billion despite climbing prices

Oracle has reportedly made a deal with Tencent for a five-year lease at several Oracle data centers in Southeast Asia, covering about 100,000 advanced AI chips unavailable in China. The deal is estimated to be worth about $7 billion, which would come out to about $1.60 per chip per hour over five years, with about 30% upfront, according to a report by the Financial Times (FT). The deal lands as compute rental prices continue to climb, per Chief Strategy Officer James Mitchell on Tencent’s August 12 earnings call. Neither company has commented on the report, but such leases are legal under current U.S. rules, per the FT.

The estimated chip-hour price is around 43% less than the roughly $2.80 per GPU-hour for Nvidia’s H100 with a one-year contract, per research firm SemiAnalysis in August. It’s also about 48% lower than the $3.09 per GPU-hour for a three-year contract with Nvidia’s B200, per a 2025 filing by Japanese data center operator Datasection for an unnamed customer. Market trends have pricing running the other way, with the FT reporting longer terms and larger upfront payments for such leases. Tencent president Martin Lau said on the same call the company could sell its existing orders at “more than 30% profit” compared to what it “paid just a few months ago.”

No chips are named. The FT says that such leases could reach even Nvidia’s top processors, but that does not mean this deal involves Nvidia hardware. One-year H100 contracts on SemiAnalysis’s index were above the estimated rate at about $1.70 per GPU-hour even as of October 2025, with the B200 rate being even more expensive despite its longer, three-year term. Going by raw B200 server costs, which exclude buildings, power, networking, and financing, 100,000 B200s would cost $5.44 billion, or about 78% of the reported value, based on Datasection’s 2025 purchase of servers with 5,000 B200s for $272 million.

Without specifics on the hardware being rented, it is not possible to determine whether this is a bulk deal or if the leasing costs are closer to the actual hardware cost. The pricing on paper, however, better fits Hopper-class at volume. Hopper would include the H100 and H200 and, with H200 imports still limited, could meet the criterion of the chips in the deal not being available in China.

The Oracle data centers are located outside China, with Tencent merely renting time on them. Details including the countries involved, sites, and start date remain undisclosed. Oracle has two Singapore cloud regions, with a Malaysia one announced. The FT says the biggest clients of Southeast Asian data centers are ByteDance and Alibaba, with Chinese firms using the capacity especially for AI training, which domestic chips cannot yet do. Tencent previously inked a $1.2 billion-plus deal for Datasection Blackwell rentals in Japan and Australia, the FT reported in December 2025.

Some Oracle clients have prepaid for GPUs or brought their own hardware since its March call, and fiscal Q4, from March to May, added $67 billion of AI contracts, mostly of those two kinds, per its June call. June through August, per its quarterly filing, the company “received $11.4 billion of prepayments from customers that included a significant financing component.” Deferred revenue rose from $15.4 billion to $30.8 billion over the quarter. No customers were named, so this can’t be tied to Tencent. The company reported 97.9% GPU utilization during its September 10 earnings call, with renewals at a 20% average premium, which was mostly on GPUs four years or older.

Tencent prepaying about 30% makes sense given Oracle’s statements earlier this year. It’s a good deal for both parties. Oracle would improve its cash flow following a quarter of negative free cash flow, and Tencent Cloud’s May price raises, per Mitchell, could help recoup the cost of the rented chips.

The legal picture, given the friction between the United States and China over AI export controls, is thorny. The Remote Access Security Act, a bipartisan bill that passed the House 369–22 in January, would give the U.S. government the right to regulate remote cloud access to sensitive technology, which could cover the chips under the reported deal. The bill specifically targets cloud loopholes and applies to any foreign person rather than naming countries, to prevent adversaries from leveraging cloud networks to bypass U.S. export bans. The bill currently sits in the Senate Banking Committee.

Separately, Export Administration Regulations license requirements under the Department of Commerce’s Bureau of Industry and Security (BIS) have covered shipments of advanced AI chips, including to China-headquartered companies abroad, since November 2023. Cloud rentals were left out, with the BIS only asking for comment on them. Renting remains one loophole around BIS guidance on restricted chips. Bloomberg reported that the BIS was reviewing offshore access with legal rentals included. The deal is also not barred by Tencent being on the Pentagon’s 1260H list of “Chinese military companies,” as this is not a sanction. No statement about the deal by any regulatory government official accompanied the report.

According to The Information, the Department of Commerce is drafting a rule to block Chinese firms from renting compute in third countries, such as Thailand and Singapore, which would align with the reported details of this deal. U.S. President Donald Trump and Chinese President Xi Jinping met late last month in Washington, covering AI and extending a trade truce for a further two months.

However, the deal is of a type that might face trouble from both the House-passed bill and Commerce’s reported rule. But the latter cannot be enforced under current law, an attorney at Baker McKenzie told The Information. At the summit, the two leaders agreed to set up a channel to handle AI-related incidents, but nothing was announced on chip controls. While the U.S. has cleared some firms, including Tencent, to buy Nvidia’s H200, China has let in only about 10,000 for Tencent so far, the FT reported in August. The next meeting between the two, at APEC in Shenzhen in November, may clarify the situation.

The reported deal comes weeks before Oracle’s Investor Day on Oct. 28 in Las Vegas, during its Oct. 25–28 Oracle AI World event at the Venetian. That would be a chance for the company to disclose details about the deal, such as announcing what hardware is to be leased. Given the hardware math, our assumption is that it involves older or non-Nvidia hardware rather than an action born of financial stress at Oracle. The month following Oracle’s event, Tencent is expected to report its Q3 results. These events could also reveal more concrete details about the arrangement.