Tencent has signed its largest-ever overseas lease agreement with US cloud provider Oracle, a deal that gives the Chinese technology giant access to around 100,000 advanced AI chips it cannot buy at home, the Financial Times reported on Wednesday, citing people familiar with the matter.
The Shenzhen-headquartered company agreed this year to a five-year lease across multiple Oracle data centers in Southeast Asia, according to the report. The
Neither Tencent nor Oracle has publicly revealed the reported deal, and both companies did not immediately respond to requests for comment. Reuters, which first circulated the FT report, said it could not independently verify the details.
A workaround for export curbs
The arrangement works because the roughly 100,000 chips never physically enter China.
Washington's export regime governs the physical transfer of advanced hardware but still permits Chinese companies to lease computing capacity in overseas data centers, giving Tencent remote access to advanced Nvidia-class chips that are not otherwise available to it.
The deal follows a shortage of domestic chip supply and tightening American export controls that have pushed Chinese technology groups to seek more computing capacity abroad.
ByteDance and Alibaba remain the biggest clients of data centers in Southeast Asia, underscoring how the region has become the offshore compute hub of China's AI race.
The commitment is already showing up in Tencent's accounts: the deal weighed on the company's free cash flow in its second-quarter earnings, a sign of how aggressively it is spending to stay in the race.
Tencent's AI build-out accelerates
The lease highlights the surging computing needs of Tencent's artificial intelligence expansion as the company ramps up investment in developing and deploying large language models.
Tencent recently released a preview version of a new AI image-generation model aimed at professional creators, offering text-to-image and image-to-image capabilities, among other features.
The company is also weaving AI agents into its ecosystem, particularly its WeChat superapp, which has more than 1.4 billion users — making reliable access to top-tier compute a strategic priority.
A timely boost for Oracle
For Oracle, the reported deal lands at a delicate moment. The company's shares rose nearly 2% in premarket trading on the news, but the stock remains down more than 50% from the highs it reached last September, as investors have grown wary of its AI infrastructure spending.
Oracle announced in September that it would increase restructuring costs by $700 million as part of its transformation to incorporate AI tools into its business and meet demand for cloud services. The company has also faced scrutiny over its balance sheet, with negative free cash flow of $5.4 billion in the most recent quarter.
A $7 billion, multi-year commitment anchored by one of China's biggest technology companies would offer Oracle exactly the kind of long-term contracted demand Wall Street has been asking to see — even as the geopolitical optics of the arrangement draw their own scrutiny in Washington.
