AI Chip Obsolescence: "Microsoft" Backs Away from Renewing Its Contracts with Oracle

Microsoft is moving to end its arrangement to lease AI computing capacity from Oracle, after declining to renew a contract that was used to support the Bing search engine, due to the equipment based on an older generation of Nvidia chips no longer meeting its changing technical requirements.

Microsoft is moving to end a commercial arrangement to lease AI computing capacity from Oracle, after declining to renew a contract under which it used Oracle's services to support the Bing search engine. Bloomberg reported that Microsoft began gradually phasing out the computing capacity leased from Oracle over the past months, as it became less suitable for its changing technical requirements. According to a report carried by Reuters, the equipment covered by the contract is based on an older generation of Nvidia chips and no longer meets the specifications Microsoft needs to run its AI systems. In response to the report, Oracle confirmed that demand for its AI infrastructure remains strong, including for previous-generation graphics processing units. Neither company disclosed the financial value of the contract or the scale of the computing capacity being phased out, while Microsoft did not immediately comment on the information reported by the agency. The announced development is limited to a specific arrangement for leasing computing resources and does not indicate an end to all cooperation between the two companies. The cooperation dates back to November 2023, when Oracle announced a multi-year agreement with Microsoft to provide additional computing capacity to support AI-powered conversational search services in Bing.