Tech giant IBM is the latest Western firm to get caught up in a growing war between Beijing and Western capitals for research and investment dollars in sensitive industries such as microchips, semiconductors.The world’s largest industrial research firm announced Monday that it is shutting down its research and development department in China and cutting 1,000 staff.But instead of restoring back to the US, the company will be shifting positions to India and other countries spokespeople told Reuters and Bloomberg. News of the cuts was initially reported by state media outlet Yucai.“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,” an IBM spokesperson told Axios in a statement Monday..It comes amid heightening economic and geopolitical tensions between the world’s two largest economies as they jostle for supremacy in both global markets as well as Asia-Pacific.Researchers in Beijing, Shanghai and Dalian were reportedly blocked from accessing company servers over the weekend.Big Blue is just the latest of a slew of Western tech companies caught in the middle of a growing trade war and tit-for-tat restrictions on materials such as critical minerals and sanctions against companies like telecom giant Huawei, ZTE and even Tik-Tok.That’s because US firms have increasingly complained about an unfair business environment, with limited intellectual property and legal protections. Those fears were compounded by a broad crackdown on Western consulting firms operating in China in a tit-for-tat exchange with the Biden administration over state run entities in the US..In response, the Chinese government has encouraged domestic companies to try to overtake the West in key technologies such as AI and push out US tech dominance in the global supply chain.In response, Washington has countered that China aims to hijack and steal American intellectual property and know-how to advance its military ambitions, especially with respect to Taiwan which is presently the world’s leading manufacturer of microchips.That’s why in 2022 the Biden administration banned the export of advanced AI chips to China.The restrictions were partly to blame for a 20% revenue drop to IBM’s Chinese operations.Other American tech companies like Microsoft and Apple are either considering or are in the process of moving key manufacturing of products and services from China to third-party countries like Vietnam.But it’s not just big manufacturers like Intel and AMD that are pulling out, financial services firms like Morgan-Stanley and venture capital companies looking to invest in high-tech are also increasingly shunning China.
