IBM, the American technology giant, has reportedly closed its research and development (R&D) facilities in China, marking another major tech firm scaling back operations on the mainland amid rising geopolitical tensions.
The company has shut down its China Development Lab and China Systems Lab, resulting in layoffs impacting more than 1,000 employees across cities like Beijing, Shanghai, and Dalian, according to local media reports.
Over the weekend, IBM’s China-based R&D staff discovered they were unable to access the company’s intranet, as reported by Chinese news outlet Jiemian. The layoffs were officially communicated during an internal meeting on Monday, with multiple employees sharing the news on Chinese social media.
In a statement to the press, an IBM representative said the company is adjusting its operations to better serve its clients, emphasizing that these changes would not affect their ability to support customers in the Greater China region. The representative highlighted IBM’s commitment to partnering with Chinese firms, particularly in the private sector, to develop hybrid cloud and artificial intelligence (AI) solutions using its extensive technology and consulting expertise.
IBM is the latest global tech giant to downsize its China operations as ongoing Sino-U.S. tensions force companies to rethink their strategies in the region. This year has seen significant job cuts affecting China-based workers at companies like Swedish telecoms firm Ericsson, electric vehicle maker Tesla, e-commerce giant Amazon, and semiconductor company Intel.
IBM’s sales in China have been on the decline in recent years. In 2023, the company’s revenue in China dropped by 19.6%, while the Asia-Pacific region overall saw a 1.6% increase. For the first half of this year, sales in China decreased by 5%, while Asia-Pacific revenue rose by 4.4%, according to IBM’s financial reports.
Despite these setbacks, IBM China’s Development Lab had been credited with making significant contributions to the company’s enterprise AI platform, WatsonX, which was announced in May of last year and made available to Chinese customers in August.
The lab had more than 24 years of experience and was responsible for the development of hundreds of key products, as noted in a blog post published by IBM China on WeChat last November. Globally, IBM reported a 2% increase in revenue for the second quarter, with software sales up by 7%. The company’s shares have risen by 21% since the beginning of the year.
