IBM China said to be laying off more than 1,000 employees as it closes research labs

US computing giant IBM has reportedly shut down its research and development (R&D) operations in China, joining a slew of global Big Tech firms in trimming their mainland businesses amid geopolitical headwinds.

IBM is closing its China Development Lab and China Systems Lab, while laying off more than 1,000 employees in cities including Beijing, Shanghai and the northern port city Dalian, according to reports by local news outlets.

IBM’s China-based R&D employees over the weekend found themselves blocked from accessing the company’s intranet system, Chinese news website Jiemian reported on Saturday. The Armonk, New York-headquartered company announced the job cuts during an internal meeting on Monday morning, according to posts by multiple employees on Chinese social media platforms.

“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, without providing details of the lay-offs.

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 said.

IBM is the latest multinational tech giant to shed jobs in China, as an intensified Sino-US rivalry forces global businesses to adjust their operations on the mainland.

IBM’s sales in China have steadily declined in recent years.

In 2023, IBM’s revenue in the country dropped 19.6 per cent compared to a 1.6 per cent rise in revenue across Asia-Pacific, according to the company’s annual report. Sales in China in the six months ended June 30 this year fell 5 per cent, while revenue in Asia-Pacific increased 4.4 per cent, IBM’s financial statement showed.

Still, IBM China credited its Development Lab for making “important contributions” to the development of the company’s enterprise-facing generative AI development platform WatsonX, in a blog post published on WeChat last November.

IBM announced WatsonX in May last year and made it available to customers in China in the following August.

The China Development Lab had “more than 24 years of outstanding development experience” and was behind hundreds of main and innovative products, IBM said in the WeChat post.

IBM reported 2 per cent growth in global revenue for the second quarter, with software sales up 7 per cent. Its shares have jumped 21 per cent since the beginning of this year.