IBM Closes Research and Development Operations in China, Cutting Hundreds of Jobs

IBM closes China R&D operations, cutting hundreds of jobs

IBM has announced it is shutting down its research and development operations in China, with hundreds of workers set to lose their jobs. The closure will impact more than 1,000 IBM workers across the country, with most of the employees affected working in R&D and testing labs. In a statement, IBM said the closure was needed as the business "adapts its operations as needed to best serve our clients." (Via WSJ) Operation Relocation At a virtual meeting on Monday, IBM executive Jack Hergenrother briefed employees on the situation, citing increasing competition in China and the decline in IBM's infrastructure business as reasons for the cuts. Tom's Hardware notes IBM's R&D operations are located across several major Chinese cities, including Beijing and Shanghai, all of which are apparently set to close. Many of the cut R&D facilities will be moved to other overseas locations, with briefed employees stating that some projects will be moved to Bengaluru, India, as well as other locations outside of China. The relocation of R&D labs will not affect IBM's provision of services inside China, with the company stating that it will still be able to support clients within China. Tensions between the US and China have led to many top technology companies making changes to their operations in the latter country, however IBM did not mention any geopolitical issues in its announcement. Microsoft has also made moves to relocate between 700-800 employees based in China to other countries, including the US, Australia, New Zealand and Ireland as part of US sanctions on China's access to advanced AI processing chips. The move is the latest in a series of major announcements from IBM as it looks to re-position itself in an industry rapidly embracing AI. Earlier this year, the company acquired HashiCorp in a $6.4 billion deal to enhance its cloud and AI offering.

IBM slashes China research team as it shifts work to other regions

American tech group IBM is closing down the majority of its research and development efforts in China, becoming the latest US company to pull back from the world's second-largest economy amid increasing tensions between Washington and Beijing. Employees said more than 1,000 staff were losing their jobs, spread between several offices in mainland cities and working in two research-focused units -- China Development Lab and China Systems Lab. IBM's move to shed R&D staff comes as a broader retrenchment by American companies takes place in China. In May, Microsoft offered to relocate hundreds of Chinese staff working on cloud and artificial intelligence as the US continued to restrict China's access to sensitive technologies. Microsoft had earlier closed its LinkedIn social networking site in the country. Jack Hergenrother, an IBM executive, cited tougher competition when he informed staff of the cuts in a virtual meeting on Monday. He said its China infrastructure business was shrinking and the group was shifting R&D work closer to customers outside the country, according to Chinese media outlet Jiemian, which first reported the news. IBM's local business faces Chinese rivals benefiting from top-down Beijing directives to local governments and state-owned groups to buy more tech products from domestic providers. "In recent years, IBM has been continuously reducing their presence -- part of the decoupling," said a former employee. Sales at the China arm fell nearly 20 per cent in 2023 from a year earlier, while the Asia-Pacific region as a whole contributed 11.7 per cent of IBM's $62bn in revenues. The tech group has also been trimming staff in other regions to boost its bottom line. Some affected IBM employees in China were given the option to relocate to other countries, while others were offered severance based on the length of their employment if they agreed to their exit packages within three weeks, two staff members said. The US group closed another big R&D unit -- the Beijing-based China Research Lab -- in 2021. Another former employee noted IBM's business in China faced difficulties. "Just like it sold the ThinkPad [laptop] business to Lenovo, it now has to shut down CDL and CSL. The businesses were not making good profits," the person said. Chinese corporate records show IBM has more than 7,500 staff in the country, with a big office in the north-eastern city of Dalian. A large research team in China could complicate winning contracts from the US government, a major customer for "Big Blue". IBM did not immediately respond to requests for comment.

IBM Pulls Research Operations Out of China, Lays Off 1,000 Employees

IBM is closing its research and development operations in China, resulting in the loss of 1,000 jobs, the South China Morning Post reports, citing local Chinese news outlets. Jack Hergenrother, IBM's VP of global enterprise systems development, confirmed the R&D shutdown in China to IBM employees in a meeting on Monday, citing Chinese competition, The Wall Street Journal reports. Plus, IBM's infrastructure business has not been doing as well in recent years, the executive reportedly said. IBM saw its revenue from China fall nearly 20% last year amid ongoing tech industry tensions between the US and China. IBM is planning to hire R&D staff in other locations, like India, according to employees familiar with the plans. Over 1,000 IBM employees in China are expected to lose their jobs, impacting staff in cities like Shanghai and Beijing. At time of writing, IBM's research division only shows a handful of jobs available based in either Japan, the US, or Singapore. IBM has not yet responded to PCMag's request for comment. IBM's research primarily focuses on artificial intelligence development, semiconductor research, quantum computing, and cloud computing technology, according to the company's website. In recent months, IBM launched an AI development platform for engineers called InstructLab and open-sourced some of its Granite AI models. Geopolitical tensions between the US and China have ramped up in recent years since the US banned the export of advanced AI chips to China in 2022. China has since taken aim at some US chip manufacturers, like Micron, and is reportedly phasing out other US chips from firms like Intel and AMD from its government devices. The US continues to restrict Nvidia's most powerful chips from being sent to China, but many investigations have found that Chinese researchers are still getting their hands on the technology despite the ongoing ban by using loopholes like buying server hardware or sneaking chips in via other countries like Singapore.

IBM reportedly shuttering its R&D hub in China - SiliconANGLE

IBM Corp. is winding down its research and development group in China, multiple publications reported today. A source told Bloomberg that the move is set to affect fewer than 1,000 employees. The Wall Street Journal put the number at more than 1,000. It's believed the R&D group focused on developing servers, storage equipment and enterprise software. Affected employees were reportedly notified of the move earlier today by Jack Hergenrother, the vice president of IBM's Global Enterprise Systems Development division. The division is responsible for, among others, developing technologies that underpin the company's Power and System Z product lines. The Power product line comprises servers based on IBM's internally developed processor series of the same name. The newest chip in the processor family, the POWER10, features circuits optimized to speed up data encryption tasks. It also includes modules built specifically to run artificial intelligence models. The System Z product line, in turn, comprises IBM's iconic mainframes. Those machines are likewise powered by internally developed silicon. The company's newest mainframe chip, the AI-optimized IBM Telum II Processor, made its debut this morning. Bloomberg reported that the job functions affected by the shutdown of the R&D group will be moved to other countries, particularly India. According to Journal, IBM told some employees that it's adding engineers and researchers in Bengaluru, one of India's largest tech hubs. The city is already home to multiple IBM offices. The decision to shut down the R&D group was reportedly driven partly by geopolitical tensions between the U.S. and China. Go-to-market considerations may have also factored into the decision. IBM's revenue in China reportedly declined by 19.6% last year. "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," a company spokesperson told Bloomberg. At least one other major tech firm is also believed to be reshuffling its R&D operations in China. Earlier this year, Microsoft Corp. reportedly asked between 700 and 800 of its technical staffers in China to consider relocation. The employees in question reportedly work on AI and cloud products. For IBM, the shutdown of its China-based R&D group represents the latest in a series of workforce adjustments made over the past few years. In 2021, the company reportedly shuttered another China-based engineering group that "focused on research into cutting-edge areas." More recently, IBM laid off about 1.5% of its workforce last January in a bid to cut costs.

IBM says will end research and development work in China

US computer giant IBM confirmed Monday it would close its research and development arm in China. Multiple employees told AFP they had been informed during a brief meeting with US executives on Monday that the company would gut its research and development team in China and move operations to another country. When asked about the cuts, an IBM spokesman told AFP: "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". The employees said more than 1,000 jobs in China could be cut and it was unclear where the company would move its operations. "Today it was just officially announced," said one employee, who declined to give his name. The employee, who said he had worked for IBM for ten years, said "everyone remained relatively calm... it feels more like a peaceful separation". The firm has operated in China for decades and employs thousands of people in the country. Its research and development teams are based in several cities including Beijing, Shanghai and Dalian. Members of those teams said they were blocked from accessing the company's server over the weekend. US-China tensions have led to numerous international companies either laying off employees or relocating some of their China operations elsewhere. The Wall Street Journal reported in May that tech giant Microsoft had this year asked hundreds of China-based employees in its cloud computing and artificial intelligence operations to transfer out of the country. The move was motivated by increasing scrutiny over its China presence, the paper said. US firms in China have increasingly complained about what they see as an unfair business environment, with limited protection for intellectual property and preferential treatment afforded to domestic competitors. Those fears were compounded last year by a broad crackdown on US consulting firms operating in China.

IBM to shut China R&D operations - report (NYSE:IBM)

IBM (NYSE:IBM) is shuttering its research and testing unit in China, a move that will affect over 1,000 jobs, Yicai reported, citing a company statement. The company is closing the IBM China Development Lab and IBM China System Lab, Yicai said, two business lines that specialize in research & development and testing. Instead, it will focus on serving private Chinese companies and multinational corporations. The China R&D functions are being moved to other overseas facilities, WSJ reported, citing employees who attended a virtual meeting on Monday morning. An IBM executive, Jack Hergenrother, told employees at the meeting that the company faced fierce competition in China with its infrastructure business declining over the past few years. The decision comes as IBM (IBM) grapples with weak demand for its hardware and marks a significant turning point in the U.S. tech firm's 40 years in China, which was once its most well-established regional market outside the U.S. Back in 2021, the New York-based company had shut its closed its China Research Lab after more than two decades of operation. Shares of IBM were down 0.83% premarket on Monday More on IBM IBM's Software And GenAI Investments Are Generating Strong Free Cash IBM: AI Peanuts IBM Q2: Software Growth Potential Supports Buy Thesis Dell, HPE's storage businesses are vital, but they've lost market share: Bernstein IBM planned purchase of HashiCorp to be reviewed by UK antitrust regulator

IBM shuts China R&D operations in latest retreat by US companies

Summary The closure will affect more than 1,000 people and the functions will move to other overseas facilities. IBM is shutting down its China research and development department, the latest retreat from the country by top U.S. technology companies. The company is moving its China R&D functions to other overseas facilities, Jack Hergenrother, an IBM executive, told employees at a virtual meeting on Monday morning, according to employees who attended. Hergenrother said IBM faced intensifying competition in China with its infrastructure business declining in the past few years, the employees said. Hergenrother said IBM plans to concentrate its R&D in several regions, the employees said. IBM has told some employees it is adding engineers and researchers in places outside China including in Bengaluru, India, according to employees who were briefed. The closure will affect more than 1,000 people, mostly working for the company's R&D labs, the employees said. They are based in several Chinese cities, including Beijing and Shanghai. A representative of IBM China didn't respond to requests for comment. Geopolitical tensions between the U.S. and China have led many multinational companies to reassess their business in China, with some laying off employees and relocating operations to other countries. IBM once saw China as a major growth market, but its market share has tumbled in recent years as local competitors upgraded their services and Beijing pushed Chinese buyers to purchase more from domestic technology suppliers, in a campaign dubbed "Delete America." IBM said its revenue in China fell 19.6% last year. U.S. companies doing business in China also face stricter scrutiny by American policymakers in strategic areas such as artificial intelligence. Microsoft is downsizing its cloud-computing and AI-research operations in China and asking local employees to consider transferring to other locations. In 2021, IBM closed a China research lab after more than two decades of operation. Write to Raffaele Huang at raffaele.huang@wsj.com

IBM says will end research and development work in China

Beijing (AFP) - US computer giant IBM confirmed Monday it would close its research and development arm in China. Multiple employees told AFP they had been informed during a brief meeting with US executives on Monday that the company would gut its research and development team in China and move operations to another country. When asked about the cuts, an IBM spokesman told AFP: "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". The employees said more than 1,000 jobs in China could be cut and it was unclear where the company would move its operations. "Today it was just officially announced," said one employee, who declined to give his name. The employee, who said he had worked for IBM for ten years, said "everyone remained relatively calm... it feels more like a peaceful separation". The firm has operated in China for decades and employs thousands of people in the country. Its research and development teams are based in several cities including Beijing, Shanghai and Dalian. Members of those teams said they were blocked from accessing the company's server over the weekend. US-China tensions have led to numerous international companies either laying off employees or relocating some of their China operations elsewhere. The Wall Street Journal reported in May that tech giant Microsoft had this year asked hundreds of China-based employees in its cloud computing and artificial intelligence operations to transfer out of the country. The move was motivated by increasing scrutiny over its China presence, the paper said. US firms in China have increasingly complained about what they see as an unfair business environment, with limited protection for intellectual property and preferential treatment afforded to domestic competitors. Those fears were compounded last year by a broad crackdown on US consulting firms operating in China.

IBM is shutting down research labs in this country, to layoff 1000 employees - Times of India

IBM has reportedly shut down its research and development (R&D) operations in China, adding its name to a growing list of major tech companies scaling back their mainland presence due to geopolitical challenges. As per a report by a Chinese publication, IBM ceasing its China Development Lab and China Systems Lab, is resulting in layoffs of over 1,000 employees in cities like Beijing, Shanghai, and Dalian. As per a report by South China Morning Post, over the weekend, IBM's R&D staff in China was unable to access the company's intranet and services. Citing multiple employee posts on Chinese social media platforms, the report said that the company, based in Armonk, New York, officially announced the job cuts during an internal meeting on Monday morning. What IBM has to say IBM has confirmed the job cuts, however, did not provide details of the lay-offs. "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 Post. IBM's local strategy is "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 was quoted as saying. IBM will now serve private enterprises and select multinationals operating in China going forward. IBM latest company to shut operations in China IBM is not the first company to cease operation in China. The development comes as tensions have been reported between China and the US over businesses. Companies like Ericsson, Tesla, Amazon.com and Intel have also been impacted, with their China-based workforce experiencing significant reductions. The TOI Tech Desk is a dedicated team of journalists committed to delivering the latest and most relevant news from the world of technology to readers of The Times of India. TOI Tech Desk's news coverage spans a wide spectrum across gadget launches, gadget reviews, trends, in-depth analysis, exclusive reports and breaking stories that impact technology and the digital universe. Be it how-tos or the latest happenings in AI, cybersecurity, personal gadgets, platforms like WhatsApp, Instagram, Facebook and more; TOI Tech Desk brings the news with accuracy and authenticity.

US tech giant disbands research division in China - media -- RT Business News

International Business Machines Corporation (IBM) is closing its research and development (R&D) division in China as the US tech giant pulls back from the world's second biggest economy amid growing tensions between Beijing and Washington. The shutdown of China Development Lab and China Systems Lab will reportedly affect more than 1,000 of the company's employees in the capital city of Beijing, as well as in Shanghai and the northern port city of Dalian. "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," a representative said, as cited by South China Morning Post, providing no details about the lay-offs. After closing the two business lines that specialize in R&D and testing, the tech giant is reportedly planning to turn toward serving private enterprises and select multinationals operating in the country. The Wall Street Journal has reported, citing employees briefed by IBM vice president Jack Hergenrother, that the tech multinational intends to shift its Chinese R&D functions to offices elsewhere. The US firm is reportedly hiring engineers and researchers in Bangalore, India. IBM is the latest of a number of international IT majors that have opted to cut staff in China amid its growing competition with the US in the tech arena, SCMP noted. The sector is seen as particularly sensitive and a source of conflict between Washington and Beijing, which are trying to outdo each other in vital spheres from semiconductors to artificial intelligence. This year, massive job cuts have affected China-based employees of Swedish telecommunications equipment manufacturer Ericson, American e-vehicle producer Tesla, online retail giant Amazon and chip company Intel.

IBM Latest US Firm To Pull Back From China

In a statement to Investopedia, an IBM spokesperson said, "IBM adapts its operations as needed to best serve our clients." IBM (IBM) reportedly is closing its China research and development (R&D) department and moving those functions overseas. The Wall Street Journal said IBM executive Jack Hergenrother informed employees of the move in a virtual meeting Monday. In a statement to Investopedia, an IBM spokesperson said, "IBM adapts its operations as needed to best serve our clients, and these changes will not impact our ability to support clients across Greater China region." The closure comes amid Beijing's push to get domestic purchasers to buy more from homegrown technology suppliers and as American firms face tighter scrutiny on their China operations by U.S. lawmakers in strategic areas like artificial intelligence (AI). IBM's closure would affect more than 1,000 people and mark the latest retreat from China by a top U.S. firm. In May, the Journal reported that Microsoft (MSFT) asked local employees to consider transferring outside the country. IBM shares edged higher to $196.74 as of 10 a.m. ET Monday. They are up 20% this year.

IBM Shuts Down China Operations, Shifts Research to Global Offices: Report - IBM (NYSE:IBM)

IBM shifts Chinese R&D to other global offices, following U.S. semiconductor sanctions and China's economic slowdown. International Business Machines Corp IBM is laying off 1,000 employees as it shutters a fundamental research division in China. The company is shuttering two business lines specializing in research, development, and testing, Bloomberg reports. IBM proposes to serve private enterprises and select multinationals operating in China. Also Read: IBM Leverages Generative AI To Boost Cybersecurity Services: Details The shutdown of operation mirrors that of a host of companies reducing exposure to China, grappling with a weak domestic economy and regulatory scrutiny. IBM plans to migrate its Chinese R&D functions to offices elsewhere, the Wall Street Journal reports citing Jack Hergenrother, a company vice president. The company is also looking for more engineers and researchers in places like Bangalore, India. IBM's move follows intensifying semiconductor sanctions on China by the U.S. backed by the retaliation from China. In July, IBM reported second-quarter sales of $15.8 billion, up by 2.1% year-on-year, beating the analyst estimate of $15.6 billion. EPS of $2.43 topped the consensus estimate of $2.19. IBM stock is up over 34% in the last 12 months. Investors can gain exposure to the stock through Vanguard Div Appreciation ETF VIG and Vanguard High Dividend Yield ETF VYM. Price Action: IBM stock is down 0.11% at $195.89 premarket at the last check Monday. Also Read: IBM-Backed Japanese Startup Rapidus To Begin Test Production Of 2-Nanometer Semiconductors In April, Revitalizing Japan's Chip Industry Photo via Shutterstock Market News and Data brought to you by Benzinga APIs