Chip stocks tumbled even further in late Tuesday trading following a report that Microsoft just walked away from talks with Oracle about leasing the company’s cloud infrastructure because of concerns over security and compliance. 

The deal, according to Business Insider, would have been worth over $3 billion – as large Silicon Valley tech companies are running short on computing power (more on that later). 

The plan was to move some Microsoft workloads to Oracle Cloud Infrastructure, but Oracle’s public cloud did not have the Federal Risk and Authorization Management Program (FedRAMP), a standardized security framework that ensures cloud services are secure enough to handle U.S. government data. Oracle was not willing to add this framework, one of the people said. -BI

Oracle has denied the scoop.

“The details mentioned in the article are inaccurate,” an spokesperson said, declining to specify the inaccuracies. “Microsoft is both an OCI partner and a customer. We have a tremendously collaborative and fruitful partnership, where we often talk about ways we can expand upon our ongoing work together.” 

The report sent Oracle and the semiconductor basket lower in what was already a dismal day for the sector.

Developing…