China’s Tencent leases 100,000 artificial intelligence accelerators to Oracle for US$7 billion

In the context of the rapid development of the AI ​​industry, many developers have to rent large amounts of computing power, and Oracle in the United States is trying to find itself as a supplier of such services, not just for fellow companies. The new deal takes into account the interests of China’s Tencent, which leases about 100,000 artificial intelligence accelerators from Oracle in Southeast Asia.

Image source: Oracle

as mentioned before financial timesTerms of the deal include a five-year lease of Oracle’s Asia computing facilities, which include 100,000 cutting-edge accelerators that Chinese companies cannot use at home due to U.S. export restrictions. The transaction value is expected to be US$7 billion, with Chinese tenants required to pay approximately 30% upfront.

According to sources, it was this transaction that caused Tencent to experience negative cash flow for the first time in more than a decade, with cash flow reaching US$2 billion in its second-quarter financial report. U.S. regulators do not prohibit Chinese companies from leasing advanced artificial intelligence accelerators outside China, although such attempts have been made for nearly a decade. At the same time, Tencent is by no means an anchor tenant in Asian data centers built on advanced U.S. accelerators—Alibaba and ByteDance play that role. High demand from Chinese tenants is driving up prices in this market.

With more than 1.4 billion users of Tencent’s popular “super apps” in China, Tencent needs to expand its computing resources. Tencent’s latest Hunyang AI model is approaching the speed of Alibaba’s Qwen series, which is considered the most advanced in the Chinese market. Tencent is also developing Agent AI services based on micro-enterprises, so new computing power is indeed needed. In terms of office environment, Tencent mainly promotes WorkBuddy AI agent, which is in a leading position in the corresponding domestic market segments. In the second quarter, Tencent’s capital expenditures increased 176% from the same period last year to US$7.9 billion as the company adjusted its organizational structure to better meet the needs of the artificial intelligence market. The pool of experts in this field is steadily expanding.