IBM’s move is set to affect over 1,000 employees from across the country, local news outlets have reported

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.

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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.