US tech giant IBM is closing its hardware research and development team in China, affecting fewer than 1,000 employees, reports Bloomberg.
The move comes at a time of rising geopolitical tensions between the US and China.
It also reflects a broader trend of companies reconsidering their presence in the region.
The affected teams, which focus on server and storage technology, will transfer their functions to other countries, particularly India, the sources said.
“IBM is adjusting its operations as necessary to best serve our customers, and these changes will not impact our ability to support customers in the Greater China region,” a spokesperson quoted by the publication said.
The shift is part of a larger pattern of companies, including Wall Street firms like Morgan Stanley, moving their operations out of China amid the economic downturn, tighter regulations and a push for domestic technologies.
According to Bloomberg According to intelligence analyst Anurag Rana, the development shows that “the region is becoming less important for US technology companies as local customers increasingly opt for local providers.”
He also indicated that this strategy shows that IBM wants to increase profit margins.
The sensitivity of hardware in the context of US-China technological competition is heightened as both countries compete for dominance in sectors ranging from semiconductors to artificial intelligence.
Beijing is working with domestic tech giants such as Huawei Technologies to limit the impact of US restrictions on its long-term development and global influence.
IBM’s strategy adjustment follows reports that Chinese entities are using cloud services from companies like Amazon to indirectly leverage advanced US AI technology that would otherwise be subject to export restrictions.
While this approach does not violate US regulations, it circumvents direct technology transfer.
The US has specifically banned the export of NVIDIA A100 and H100 chips to China. These chips are used in advanced AI models such as OpenAI’s ChatGPT.
The regulation, introduced in 2022 by the US Department of Commerce, prevents the supply of chips with potential military or AI applications to Chinese companies.
“IBM to close R&D team in China, affecting about 1,000 workers” was originally created and posted by Pronunciationa brand of GlobalData.
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