In a brief meeting with US executives on Monday, multiple employees reported to AFP that IBM plans to significantly reduce its research and development team in China and relocate operations to another country.

This coincides with Washington's increasing pressure on US businesses to either exit China or limit their operations and transactions with Chinese companies and markets, under the threat of potential sanctions.

An IBM spokesperson addressed the cuts, stating to the agency, "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."

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According to employees, the decision could affect over 1,000 jobs in China, and the destination for the relocated operations remains unclear. "Today it was just officially announced," said one employee, who chose to remain anonymous.

The employee, who has been with the tech giant for ten years, described the atmosphere as relatively calm, noting that "it feels more like a peaceful separation."

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The firm has operated in China for decades and employs thousands across various cities, including Beijing, Shanghai, and Dalian, where its research and development teams are based. Over the weekend, these teams were reportedly blocked from accessing the company's server.

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The Wall Street Journal noted in May that Microsoft had requested hundreds of its China-based employees in cloud computing and AI to transfer out of the country.

Packaging Technology

Artificial intelligence, cloud computing, and semiconductors have been at the core of the United States' tech war against China.

Despite US efforts to restrict China's access to advanced chips and foundry technologies, the Asian giant has maintained a robust upward trajectory in developing its own chip production industry and advancing its AI capabilities.

A top semiconductor industry executive in China said in July the upcoming advancement that would combat the US' technological sanctions due to its advantageous applications and packing technologies.

Chen Nanxiang, the China Semiconductor Association (CSIA) chairman and head of Yangtze Memory Technologies Corporations (YMTC), said an interview with CGTN that China's new focus is on "innovation in industry, products, services, and business models, which ultimately will have to bring value."

Read more: Taiwan 'stole our chip business', 'should pay for defense': Trump

Chen also highlighted that advanced packaging may play a significant role in the future.

“For example, the hottest AI chips are in need of state-of-the-art foundry and packaging technologies,” he said. “It can be predicted that, in the very near future, the importance of packaging technology may exceed the importance of foundry technology.”

The YMTC head urged the industry to unite to tackle US sanctions, highlighting that China's policymakers and industry players continue to search for the best strategy to progress, adding that a prolonged period of trial and error has revealed which models are prone to failure.