TECH

Tencent Cloud Shuns Price War in Intensifying AI Race

Published: Sep. 17, 2025 3:53 a.m. GMT+8

00:00

00:00/00:00

Listen to this article 1x

IDC data shows Tencent Cloud held 11.7% of China’s public cloud PaaS market in the second half of 2024.

Tencent’s Cloud unit said Tuesday that it will not join a price war in China’s increasingly competitive artificial intelligence (AI) cloud market, betting instead on sustainable growth and global expansion.

Speaking at the Tencent Global Digital Ecosystem Summit, Li Qiang, Tencent Vice President and President of Enterprise Business, warned that price-driven competition has historically eroded profits across industries, from ride-hailing to smartphones to electric vehicles.

You've accessed an article available only to subscribers

Subscribe today for just $.99.

VIEW OPTIONS

Unlock exclusive discounts with a Caixin group subscription — ideal for teams and organizations.

Subscribe to both Caixin Global and The Wall Street Journal — for the price of one.

Share this article

Open WeChat and scan the QR code

DIGEST HUB

Digest Hub

Back

Explore the story in 30 seconds

Tencent Cloud rejects joining China’s AI cloud price war, focusing on sustainable growth and global expansion, with double-digit international growth and major investments abroad.
The company prioritizes R&D, integrated services, and supports multiple domestic chips amid Nvidia access uncertainty; capital expenditures hit 83.2 billion yuan ($11.5 billion) since late 2023.
Tencent Cloud ranks No. 2 in China’s PaaS market (11.7%), behind Alibaba Cloud (24.4%), and shifts toward higher-margin AI applications.

AI generated, for reference only

Who’s Who

Tencent: Tencent's Cloud unit will prioritize sustainable growth and global expansion over engaging in a price war in China's AI cloud market. They aim for "integrated" services within broader ecosystems and avoid loss-making discounts. Tencent is also focusing on "intelligence" and "globalization," with strong international growth and investment in overseas infrastructure. They are diversifying chip suppliers, including domestic options, and experimenting with advertising and cross-subsidization for AI monetization. Tencent is China's No. 2 cloud vendor.

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is a Chinese company that produces domestic chips. It is mentioned as one of the suppliers that Tencent and other cloud providers are stocking up on to hedge against uncertainties in accessing Nvidia's H20 chips due to shifting U.S. export policies. Huawei Cloud is also listed as one of the top five public cloud PaaS market vendors in China.

Cambricon Technologies Corp. Ltd.: Cambricon Technologies Corp. Ltd. is mentioned as a domestic chip supplier that Tencent and other cloud providers are using to diversify their options amid shifting U.S. export policies. Although it reported a 43-fold revenue increase in the first half of 2025, it still faces challenges with yield rates and production capacity.

Kunlun Tech Co. Ltd.: Kunlun Tech Co. Ltd. is a Chinese chip supplier. Tencent and other cloud providers are stocking up on domestic chips from suppliers like Kunlun Tech to hedge against uncertainty with Nvidia's H20 chips due to shifting U.S. export policies. These domestic suppliers are racing to scale production.

GoTo Group: GoTo Group, an Indonesian client of Tencent Cloud, utilizes its services internationally. Tencent Cloud has experienced strong double-digit growth outside of China over the last three years, with GoTo Group being one of its notable global clients.

CP Group: CP Group is a Thai conglomerate that is a client of Tencent Cloud. Tencent Cloud's international business has seen strong double-digit growth over the past three years, with CP Group being one of its notable international clients.

e&UAE: e&UAE is a client of Tencent Cloud's international business. Tencent Cloud has experienced strong double-digit growth internationally over the past three years, with e&UAE being one of its notable clients, alongside companies like Indonesia's GoTo Group and France's Orange S.A.

Orange S.A.: Orange S.A. is a telecom giant based in France. According to the article, it is listed as one of Tencent Cloud's international clients. Tencent Cloud has seen strong double-digit growth internationally over the past three years, partly due to partnerships with companies like Orange S.A.

Tabelog: Tabelog is a client of Tencent Cloud. It is a Japanese company, indicating Tencent Cloud's international reach and growth. This partnership highlights Tencent Cloud's strategy to expand globally and serve diverse clients, including those in Japan.

Alibaba Cloud: Alibaba Cloud is currently the top public cloud PaaS market vendor in China, holding 24.4% of the market share as of the second half of 2024. This places them ahead of competitors such as Tencent Cloud and Huawei Cloud.

Amazon's AWS: Amazon's AWS is mentioned as one of the top five public cloud PaaS market providers in China during the second half of 2024. It ranks behind Alibaba Cloud and Huawei Cloud, but ahead of China Telecom.

China Telecom: China Telecom is mentioned as one of the top five public cloud PaaS market providers in China during the second half of 2024, alongside Alibaba Cloud, Tencent Cloud, Huawei Cloud, and Amazon's AWS. No further details about China Telecom are provided in the article.

AI generated, for reference only

What Happened When

2022–2025：: Tencent Cloud’s international business logged strong double-digit growth over the past three years.

Second half of 2024：: Tencent Cloud held 11.7% of China’s public cloud PaaS market, trailing Alibaba Cloud at 24.4%.

Late 2024：: Tencent accelerated its AI strategy and subsequently spent 83.2 billion yuan ($11.5 billion) on capital projects.

Since September 2024：: Tencent’s AI-powered customer service handled over 100 million interactions in the past year.

2025：: Tencent pledged more than $150 million for its first Middle East data center in Saudi Arabia, slated to open in 2025, and planned a third data center in Osaka with a new local office.

First half of 2025：: Cambricon reported a 43-fold revenue surge.

By mid-2025：: Tencent Cloud expects to have 11 regional offices worldwide.

April 2025：: QQ Browser’s AI monthly active users began rapid growth, with usage increasing nearly 18-fold since then.

Second quarter of 2025：: Tencent’s capital expenditures, including IT infrastructure and data centers, increased 119% year on year.

September 16, 2025：: Tencent’s Cloud unit announced it will not join a price war in China’s AI cloud market at the Tencent Global Digital Ecosystem Summit.

AI generated, for reference only