IBM shuts down R&D division in China, once a major market for the tech giant

IBM may move the Chinese R&D functions to other locations, the Wall Street Journal has reported.

IBM will shut down its research and development division in China, resulting in layoffs affecting over 1,000 jobs, Chinese media outlet Yicai said on August 26.

IBM has been struggling with falling demand for IT hardware and challenges to growth in China, which once was a major market with strong business presence outside the US. "These changes will not impact our ability to support customers in China," the media outlet said, quoting IBM China. IBM will now focus on serving private enterprises and select multinationals in China, Yicai said.

Major Wall Street companies like Morgan Stanley too have shifted some operations abroad in the recent past, capturing a slowdown in foreign investment into China. IBM may move the Chinese R&D functions to other locations, the Wall Street Journal has reported.

US and China have been locked in a tussle to establish edge over crucial areas such as semiconductors to artificial intelligence, with China calling the US targeting of certain investments in artificial intelligence in China as not helpful.

The US has been attempting to restrict China’s access to AI memory chips made by Micron Technology and SK Hynix, along with equipment capable of making such semiconductors.

Earlier this year, IBM has shared plans to ramp up hiring in India for its innovation centre and labs, showing willingness to expand beyond the top-tier cities.

In July, HCLTech and IBM had announced a partnership for a generative AI Centre of Excellence (CoE) based on IBM watsonx AI and data platform. This CoE will be available through HCLTech’s AI and Cloud Native Labs in Noida, London and New Jersey and Santa Clara in the US.