China’s Tencent leases 100,000 chips from Oracle to accelerate AI push

{"text":[[{"start":9.35,"text":"Tencent has signed its largest overseas lease deal with US cloud provider Oracle as the Chinese tech giant strives to catch up in an escalating AI race. "}],[{"start":19.799999999999997,"text":"The leading social media and gaming group in China this year agreed to a five-year lease across multiple Oracle data centres in south-east Asia, according to two people with knowledge of the matter. "}],[{"start":31.599999999999998,"text":"The deal enabled Tencent to access about 100,000 advanced AI chips that were not available in China as it further advanced its AI models and developed agentic tools, the people said. "}],[{"start":42.5,"text":"The agreement is estimated to be worth about $7bn, with an upfront payment of about 30 per cent, according to one of the people. "}],[{"start":49.9,"text":"This contributed to a negative free cash flow of Rmb13.8bn ($2bn) in Tencent’s second-quarter earnings — the first negative quarterly figure in more than a decade."}],[{"start":61.45,"text":"A shortage of domestic supply and tightening American export controls have led Chinese tech groups to seek more computing capacity overseas. Such lease deals, allowed under US rules, could also offer access to Nvidia’s cutting-edge processors not available in China."}],[{"start":null,"text":"

"}],[{"start":77.65,"text":"Chinese tech giants and frontier AI labs are tapping into these resources especially for the training of their models, as domestic chips cannot perform such tasks yet."}],[{"start":86.7,"text":"While Tencent is catching up with multibillion leasing deals, ByteDance and Alibaba remain the biggest clients of data centres in south-east Asia. "}],[{"start":96.75,"text":"Demand has intensified as the US tightened export controls to prevent Nvidia’s advanced chips from entering China via an intermediate location. This has led to increased prices, longer terms and higher upfront payments for these data centre lease agreements."}],[{"start":112.95,"text":"Tencent’s infrastructure spending soared in the past year as it continued to catch up in AI capabilities. The company is also implementing AI agents in its ecosystem, particularly its WeChat superapp that has more than 1.4bn users. "}],[{"start":126.95,"text":"Its latest Hunyuan models have shown substantial improvements in performance, closing the gap with top-tier domestic models such as Alibaba’s Qwen."}],[{"start":135.9,"text":"Armed with stronger models, Tencent is rolling out Xiaowei, an embedded agent in WeChat, to execute tasks across the superapp’s millions of mini-programmes, such as ordering food or booking services, based on natural language commands."}],[{"start":150.75,"text":"Tencent has also built a matrix of AI agents for productivity and enterprise, led by WorkBuddy, its flagship AI-native office agent, which has seen rapid user growth and leads the PC-based office agent market in China."}],[{"start":165.05,"text":"Capital expenditure in the second quarter jumped 176 per cent year on year to Rmb53bn ($7.9bn) for AI infrastructure and pre-payments for computing resources, according to the company."}],[{"start":179.75,"text":"In addition, Tencent has hired more top-tier talent and restructured its infrastructure and data departments to support its AI push."}],[{"start":187.55,"text":"Tencent and Oracle did not respond to a request for comment."}],[{"start":191.75,"text":"Additional reporting by Rafe Rosner-Uddin and Ryan McMorrow in San Francisco"}],[{"start":206.35000000000002,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1790830884_1458.mp3"}