Oracle reportedly scraps a $7 billion chip rental for Tencent as Nvidia curbs Chinese cloud customers

Oracle has cancelled a five-year deal to rent Tencent about 100,000 advanced AI chips in Southeast Asian data centers, the Financial Times reported on November 4. The deal was worth roughly $7 billion.

Nothing in US law barred it. According to the FT, which cited two unnamed people familiar with the matter, the contract ended after US officials raised concerns with Oracle directly.

That is the part investors should focus on. Renting computing power in a third country has been a key legal way for Chinese tech giants to use top US chips they cannot import. That route is now narrowing through informal pressure on the companies that own the chips, not through a published rule. Informal pressure is harder to forecast and harder to price.

Oracle, Tencent and the White House did not comment, TechNode reported. Reuters said it could not independently verify the FT story. Oracle has not said how it will account for the lost contract.

A legal deal, undone anyway

When the agreement surfaced in early October, it looked like a template for working within export controls. US rules have required licenses since late 2023 to ship advanced AI chips to Chinese companies, but cloud rentals were left out, Tom's Hardware noted. A House bill to cover remote access passed 369 to 22 in January and has since sat in a Senate committee.

The contract was large by Tencent's standards, reportedly its biggest overseas computing lease. The FT reported that Tencent would pay about 30% upfront and that the deal worked out to about $1.60 per chip per hour. Tom's Hardware put that roughly 43% below typical one-year rates for Nvidia's H100 and said it fits older-generation chips bought at volume, though the chip type was never disclosed. Neither company confirmed the terms.

Pressure came from Beijing too. Senior officials in Guangdong, Tencent's home province, visited the company and urged it to support Chinese-made chips, the FT reported. Wedbush Securities said political concerns on both sides may help explain the cancellation.

Nvidia's 51% rule

A day earlier, the FT reported a broader shift. Citing five people familiar with the matter, it said Nvidia has told cloud providers buying its chips to sell at least 51% outside China.

Nvidia's sales and regional teams have delivered the instruction verbally since the summer, Silicon UK reported. It is not written into contracts. It applies to new contracts, not existing leases. Nvidia had not previously set limits on who its partners' customers could be.

The move sits alongside tighter vetting. Nvidia cut its list of approved Asian buyers by more than half in July, according to a Crypto Briefing report. Smaller GPU rental firms in Singapore, Malaysia and Japan were hit hardest. The same report describes site inspections, contract checks and interviews with end users.

Nvidia's public line is that US policy "supports the use of US infrastructure such as processors around the world." The company has reason to be seen as strict. Several Super Micro employees were charged this year over an alleged $2.5 billion scheme to move Nvidia-based servers into China. Those charges are unproven.

Who carries the risk

The most exposed businesses are the data center operators that built capacity for Chinese demand. Chinese firms are reportedly the largest cloud customers in markets such as Southeast Asia. A Singapore-based cloud company told the FT it struggles to find enough non-Chinese customers outside the US.

The numbers are large. Korean business outlet The Economy cites Cushman & Wakefield data: about half of the 4.8 gigawatts of Asia-Pacific capacity under construction in the first half of 2026 was in Southeast Asia. Citing Caixin, it says 60% to 70% of Thailand's 1.5 gigawatts of approved projects are tied to Chinese investors or customers. ByteDance anchors a 110-megawatt campus in Johor, Malaysia.

US cloud providers are exposed as well. ByteDance and Alibaba reportedly hold major chip leasing deals with them. Oracle itself is a key computing supplier to ByteDance in Asia and runs several data centers in Malaysia, the FT reported. Any review of those contracts would reach well beyond Tencent.

For Oracle, the direct loss is small next to its AI order book, though GuruFocus noted the financial impact is unclear. It still matters at the margin. Oracle has leaned on customer prepayments to fund its buildout. It took in about $11.4 billion of them in its fiscal first quarter, June through August, while free cash flow was negative, Insider Monkey calculated. A large contract that can end once officials raise concerns is a reminder that some backlog carries political risk.

For Chinese buyers, the push is toward domestic chips. That is exactly what Beijing wants, and it may cost Nvidia long-term customers it cannot easily win back.

Three things will show whether this is a one-off or a new rulebook. First, whether the Commerce Department finalizes a rule it is reportedly drafting to block Chinese firms from renting computing power in third countries. A Baker McKenzie lawyer told The Information it could not be enforced under current law. Second, whether the ByteDance and Alibaba leases draw the same scrutiny. Third, whether Nvidia's verbal 51% guidance turns into contract terms that lenders and landlords can see.

Until then, investors in any regional data center with a Chinese anchor tenant may need to price in the chance that the tenant leaves.