Oracle cancels $7 billion Tencent chip lease as memory costs bite

Oracle pulls a $7 billion lease

The Financial Times reported last month that Oracle had signed a five-year agreement. The deal leased 100,000 chips to Tencent. It was the Chinese firm's largest ever overseas deal. US officials told Oracle of their concerns about the deal, the FT said, citing two people familiar with the matter.

Tencent did not immediately respond to a request for comment. The cancellation matters beyond the two companies. It leaves Tencent without a signed supply deal. It also lands as memory prices rise for hardware buyers.

Neither Oracle nor Tencent has said what the cancellation costs.

Apple warns on memory costs

Apple chief executive John Ternus spoke on a conference call on Monday. He said memory costs in the fourth quarter would be higher than in the previous three months. "What we're seeing with memory pricing right now is unprecedented," Ternus said.

Apple raised iPad and MacBook prices in June, then iPhone prices in September. Ternus said those increases had "provided some offset" for the company. Revenue rose 12% to $114.5 billion from $102.5 billion. Earnings came in at $2.10 a share against $1.99 expected in a FactSet poll. Shares fell 2.75% in after-hours trading.

Apple posted stronger-than-expected revenue in its fiscal third quarter. Net income was $30.71 billion, up from $27.47 billion a year earlier. Apple said earnings included five cents a share from tariff refunds.

Huawei sends buyers to the grey market

Huawei is telling some customers to source memory for its AI chips themselves. The Information reported this, according to The Decoder. The company plans to launch the Ascend 960DT early next year. It says it will double the performance of its current chips.

US rules block direct purchases from Samsung and SK hynix. Those two firms control more than 80% of the global HBM market. Huawei's Chinese suppliers cannot produce enough HBM. Smuggled HBM3E memory has jumped from a few hundred dollars to around $4,000 per unit in just one year, according to a Shenzhen broker cited by The Decoder. Each AI chip needs six to eight units, so the memory alone can cost up to $32,000.

The black market also draws on older Nvidia GPUs stripped for parts and excess inventory from chip designers that scrapped projects or cut orders.

The loophole: cheap processors, expensive memory

A smuggler told The Information that his chip design firm builds cheap, low-performing processors. Tom's Hardware relayed that account. The processors sit below the US and South Korean export threshold.

Those boards are paired with HBM from Samsung and SK hynix. That memory is banned for export to China on its own. The rules look only at processor performance, so the attached memory travels with it. Boards land in Hong Kong and cross into Shenzhen in commuters' luggage. Workshops heat the boards to soften the solder and lift the memory chips off. Despite a high failure rate, the high price of HBM makes the procedure lucrative.

What to watch

Huawei's Ascend 960DT is due early next year with its memory supply unresolved. South Korea's customs authority had uncovered trade violations worth $560 million by May, already past the previous full-year record. A third of that total involved strategic goods. Those included chips exported without authorisation or with false declarations.