Microsoft Corp (NASDAQ:MSFT) has requested hundreds of its China-based employees to consider relocating amid the escalating technological tensions between the U.S. and China.
What Happened: The company recently extended relocation offers to around 700 to 800 staff members, primarily engineers of Chinese nationality. These individuals are being given the chance to transfer to various countries such as the U.S., Ireland, Australia, and New Zealand, reported The Wall Street Journal on Thursday, citing people familiar with the matter.
The relocation initiative targets employees involved in machine learning and other tasks linked to cloud computing.
Microsoft has approximately 7,000 engineers working in its Asia-Pacific research and development division, with the majority located in China.
This move by Microsoft, a major player in cloud computing and AI, comes as President Joe Biden‘s administration tightens restrictions on China’s access to advanced AI technology. The White House is considering new regulations that would require U.S. companies, including Microsoft, to obtain licenses before providing Chinese customers with access to AI chips.
A Microsoft spokesperson stated that the company remains committed to the region and will continue to operate in China. The offer to relocate was made earlier this week.
Why It Matters: The move by Microsoft comes in the wake of the Biden administration’s efforts to curb China’s access to cutting-edge technology.
On Tuesday, President Biden announced a significant increase in tariffs on a range of Chinese goods, aimed at protecting the American economy and safeguarding domestic jobs. These measures were also designed to counteract China’s heavily subsidized production, which was said to be “flooding the market” and harming U.S. manufacturers.
Microsoft’s decision to relocate its China-based AI employees also follows a series of other developments. Chinese scientists recently achieved mass production of optical chips at a low cost, potentially softening the impact of U.S. sanctions. This breakthrough involves photonic integrated circuits, which use light particles to process and transmit data, enhancing speed and reducing energy use.
China has strongly condemned the Biden administration for increasing tariffs on a range of Chinese imports, vowing to retaliate. The Chinese government has criticized the additional tariffs as “political manipulation,” pointing out that the decision comes ahead of the U.S. elections this year.
Chinese Embassy spokesman Liu Pengyu dismissed accusations of Chinese overcapacity as a “false narrative” aimed at hampering China’s economy. He praised China’s manufacturing sector for its competitiveness, innovation, and efficiency.
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