Tencent Secures 100,000 Offshore AI Chip Deal with Oracle for $7 Billion

Oracle and Tencent Reportedly Ink Major AI Chip Deal

Oracle has reportedly entered a five-year agreement with Tencent for the lease of approximately 100,000 advanced AI chips. The deal, estimated at $7 billion, involves Oracle's data centers located in Southeast Asia. This arrangement provides Tencent with access to AI compute resources that are not available within China due to export restrictions.

Pricing and Market Context

The reported cost for the lease is approximately $1.60 per chip per hour over five years, with a 30% upfront payment. This pricing is lower than current market rates for comparable Nvidia GPUs, such as the H100 and B200, according to research from SemiAnalysis and a Datasection filing. The deal occurs amidst a market trend of increasing compute rental prices, with longer terms and larger upfront payments becoming common.

Hardware Specifications Undisclosed

The specific type of AI chips involved in the deal has not been disclosed. While the Financial Times suggested the lease could include top-tier Nvidia processors, the exact hardware remains unconfirmed. The estimated pricing, however, aligns more closely with Hopper-class GPUs, such as the H100 or H200, at volume. H200 imports are currently limited, fitting the criterion of chips unavailable in China.

Strategic Implications for Tencent

This deal allows Tencent to circumvent restrictions on advanced AI chip access within China by utilizing offshore data centers. Tencent President Martin Lau previously indicated the company could profit significantly from selling existing chip orders, highlighting the high demand and increasing value of AI compute resources.