연합뉴스2 hours agoTech2 min readSouth Korea

Microsoft suspends lease of Oracle data center... Cloud partnership revisited

Oracle reacts by saying, “Demand for older chips is still strong”; stock price plunges during the day and closes at a strong level

Quick Look

Microsoft is completely reviewing its lease agreement for Oracle data center computing resources.
This is because the usability has decreased due to the installation of an old Nvidia chip.
Oracle responded by saying that demand for older chips was still strong, and on news of the MS contract review, Oracle's stock price plunged more than 5% during the day, but ended on a strong note.

AI-generated summary

Why It Matters

MS has signed computing resource rental contracts worth a total of more than $80 billion (approximately KRW 110 trillion) with NeoCloud Group data center operators such as Oracle, CoreWeave, Nscale, and Nevius, but has decided to completely review the Oracle data center contract, which has become less useful due to the installation of older Nvidia chips.

Font size

Microsoft (MS), one of the world's top three cloud service providers, has decided to completely review its contract to borrow computing resources from Oracle.

Bloomberg News reported on the 6th (local time), citing multiple sources, that MS has not extended its computing resource rental contract with Oracle and has been suspending it one by one over several months.

Sources said that the reason Microsoft decided to suspend the contract was because old Nvidia chips were installed in the Oracle data center it had been renting, which reduced their usefulness.

It is known that Microsoft is also looking into computing resource rental contracts with other data center operators in addition to Oracle.

This is a change in policy from signing contracts worth more than $80 billion (approximately KRW 110 trillion) and borrowing computational resources with specialized data center operators, the so-called 'neocloud' group, such as Coreweave, Nscale, and Nevius.

Microsoft's action was announced at a time when public opposition to data centers was confirmed following the Democratic Party's landslide victory in the U.S. midterm elections.

Oracle told Bloomberg, "Demand for our AI infrastructure, including the previous generation of graphics processing units (GPUs), is still solid," suggesting that Microsoft's actions are out of sync with the market trend.

In fact, Oracle announced last September that it had renewed the contract for the computational infrastructure cost of Nvidia's GPU, which was released four years ago, at a 20% premium over the initial price.

Ornn, an AI computing financial trading platform, also announced in September that rental prices for older Nvidia chips H100 and H200 are rapidly rising.

As news broke that it was difficult to extend the contract with Microsoft, Oracle's stock price plunged more than 5% during the day, but it later made up for the loss and closed the regular trading session on a strong note, up about 0.8% from the previous day's closing price.

What to Watch

AI outlook — possibilities, not facts

Microsoft will suspend its lease contract for Oracle data center computing resources over several months.
Very likely · Within months
Oracle will maintain that demand for older chips remains strong.
Likely · Within months

Open Questions

It is not clear whether Microsoft will completely suspend the Oracle contract or only partially reduce it.
There was no word on whether Oracle plans to replace older chip data centers with newer chips.
It is unclear what the outcome of the review of contracts with other data center operators will be.