Tencent can't buy advanced AI chips. It leased 100,000 from Oracle for $7 billion.
Tencent has agreed to lease about 100,000 advanced AI chips from Oracle for five years in a deal worth about $7 billion, the Financial Times reported on Thursday.
The chips will sit in several Oracle data centres in Southeast Asia.
US rules stop Chinese tech companies buying advanced AI chips outright, while still allowing them to lease the computing capacity abroad. The Financial Times called it Tencent's largest overseas lease ever.
About 30% of the contract is paid up front. According to the report, the deal weighed on Tencent's free cash flow in its second quarter.
The arithmetic: $7 billion over five years for 100,000 chips works out at an average of about $14,000 per chip per year; the report gives no hardware-only price. Roughly $2.1 billion of it is paid up front. The report does not say what the contract provides if the US rules on leasing change.
The report carried no comment from Oracle or Tencent.
Would your company pay $2.1 billion up front for a lease that rests on export rules?
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