Tencent scores 100,000 offshore AI chip deal with Oracle for $7 billion despite climbing prices
Tencent is reportedly renting 100,000 AI chips from Oracle data centers in Southeast Asia for about $7 billion over five years.
Tencent has secured a five-year lease for a substantial number of advanced AI chips from Oracle, valued at approximately $7 billion. The deal includes about 100,000 chips that are not readily available in China. The cost per chip per hour over the five-year period is estimated to be around $1.60, with roughly 30% paid upfront. This price is significantly lower than Nvidia's H100 and B200 GPU offerings, even when considering contract durations and upfront payments.
The data centers where the chips will be used are located outside China, and the lease agreement is considered legal under current U.S. rules. Tencent sees potential to recoup costs from existing chip orders at a higher profit margin compared to previous sales. The deal benefits both companies, with Oracle receiving a steady cash flow and Tencent potentially benefiting from lower chip costs.
However, legal and regulatory concerns, such as the Remote Access Security Act and potential future restrictions, could impact the deal.
Written by urgent.news from Tom's Hardware's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
