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Amid rising geopolitical tensions, Western tech giants are retreating from China. According to South China Morning Post, Microsoft has quietly shut down its IoT & AI Insider Lab in Shanghai’s hi-tech zone.
The report suggests that the lab, once a hub to boost China’s local IoT and AI development, closed in January or February. The office was now found empty, with its equipment cleared out, the report adds.
As per South China Morning Post, the lab, launched in May 2019, was a flagship project in Shanghai’s Zhangjiang, a major innovation hub packed with semiconductor and AI firms.
By its fifth anniversary in June 2024, it had helped over 50 firms secure 9.4 billion yuan ($1.3 billion) in investments, achieved 139 tech breakthroughs, and trained nearly 10,000 professionals, the report says.
Prior to this, a CNBC report, citing The Wall Street Journal, noted that in 2024, Microsoft urged China-based cloud and AI staff to consider relocating amid U.S. tech restrictions on Beijing. Around 700–800 employees working in machine learning and cloud computing reportedly received the offer.
While Microsoft doesn’t disclose China revenue, President Brad Smith said in 2024 that the market makes up just 1.5% of its global earnings, as per South China Morning Post.
IBM amid the Wave of Withdrawals
Microsoft isn’t the only tech giant pulling out of China. According to Chinese media outlet YiCai Global, in early 2025, IBM has officially shut down its China R&D division after 32 years, citing a completed mission and a shift toward global integration.
According to a previous South China Morning Post report, citing a former IBM employee, IBM cut around 1,600 research lab jobs in China last year.
However, South China Morning Post notes that IBM will continue operating in China through IBM (China) Company Limited. As per a representative cited by the report, the shift won’t impact IBM’s ability to support local clients, highlighting its focus on hybrid cloud, AI, and consulting.
Notably, in addition to China, IBM is also laying off thousands of employees across multiple locations in the U.S., as per The Register. The report suggests that around 9,000 positions may be at risk, and the jobs may be heading to India.
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(Photo credit: Microsoft)
