IBM Closing China Research Labs, Will Lay Off Over 1,000 Staff

US computing conglomerate IBM has announced that it will shut down its research and development units in China.

The move, confirmed in a statement on Monday, will cost more than 1,000 employees their jobs in cities such as Beijing, Shanghai and Dalian, a port city in the northeast.

IBM – the world’s biggest technology services company – is the latest US tech firm to curb operations on the Chinese mainland because of rising geopolitical tensions and a decline in business amid a tougher regulatory stance by both Beijing and Washington.

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Employees in China’s R&D units found themselves unable to access the group’s intranet system on Saturday, according to a local news site.

“IBM adapts its operations as needed to best serve our clients, and these changes will not impact our ability to support clients across the Greater China region,” an IBM representative said in an email to the South China Morning Post, which said it gave no details of the lay-offs.

IBM’s strategy in China was “focused on having the right teams with the right skills” to help Chinese companies – especially privately owned firms – co-create hybrid cloud and artificial intelligence (AI) solutions by drawing on its “considerable technology and consulting expertise”, the representative said was quoted as saying.

The decision comes after the company shut another research lab in China in 2021 which ran for more than two decades.

An IBM executive told employees on Monday the group faced intensifying competition and its infrastructure business had dropped in recent years.

Its revenue in China fell by 19.6% in 2023 after Beijing backed a push to encourage consumers to buy more tech products from local companies such as Huawei, later dubbed a “Delete America” campaign.

US companies in key sectors such as telecommunications, computer chips and artificial intelligence in China have all faced tougher scrutiny from local officials and US lawmakers.

Some employees have been told IBM is adding engineers in alternate sites in Asia, such as Bengaluru in India, according to the Wall Street Journal, which said it could move some of its operations to other facilities overseas.