IBM Cuts China Research Team as Washington-Beijing Tensions Continue, 1,000 Jobs Affected
IBM pulls plug on China operations. (Photo by Shen Chunchen/VCG via Getty Images)
Key Takeaways
- International Business Machines is set to make sweeping cuts in its China-based research and development team.
- The cuts are expected to affect over 1,000 roles.
- IBM has become the latest US company to begin pulling back from China.
International Business Machines (IBM) is pulling back a large proportion of its research and development team in China, becoming the latest US tech giant to move operations out of the country as tensions continue to grow between Beijing and Washington.
Over 1,000 staff members are expected to lose their jobs between two research-focused units, China Systems Lab and China Development Lab, the Financial Times reported.
IBM To Leave China
On Monday 26. Aug, IBM vice president Jack Hergenrother reportedly claimed tougher competition was one of the main reasons for staff cuts in China.
According to Chinese media outlet Jiemian, the executive said China’s infrastructure business was decreasing.
IBM’s business in China has suffered due to local competition receiving benefits from the government and custom from state-owned businesses.
Big Tech Swerves China
Several US tech companies have started to move away from China or reduce their dependence on Chinese manufacturing.
The growing shift away from China has been driven by trade restrictions, national security concerns, and tech giants’ hunger to diversify supply chains.
In August 2023, Apple’s major supplier, Foxconn, announced it was investing a further $600 million in India for two manufacturing plants for iPhone equipment.
Microsoft asked its China based cloud computing and AI operations staff to consider relocating elsewhere in May.
The tech giant offered around 700 to 800 China-based staff to transfer to countries including the US, Ireland, Australia, and New Zealand, according to the Wall Street Journal.
China and US Tensions Continue To Grow
Tech tensions between China and the US have been escalating over the past few years, primarily revolving around national security concerns, economic competition, and geopolitical strategies.
In October 2022, the Biden Administration tightened semiconductor export sanctions to China, first set by Donald Trump’s administration in 2019.
The measures, which limited the export of US tools and equipment used for producing advanced semiconductors, were driven by concerns over China’s rapid advancements in semiconductor technology.
The US government said the restrictions were to protect national security.
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