Saturday, May 25, 2024

China’s technology sector faces new round of lay-offs from global firms

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Swedish telecommunications equipment maker Ericsson’s plans in China will involve cutting about 240 positions at its core network research and development (R&D) facility on the mainland, a company representative said in an email.

Ericsson, which last month announced it was axing about 1,200 jobs in its home market, is now “diversifying [its] R&D footprint in alignment to sales”, according to the representative, who added that the company “remains committed to our customers in mainland China” and that it is not exiting the market.
The firm had earlier indicated a contraction in 5G network equipment spending in large markets like the United States.
The logo of social media giant ByteDance is seen on a building in Shanghai on March 14, 2024. Photo: Bloomberg
While China’s Big Tech companies already saw their payrolls shrink in 2022 and 2023 to rein in costs, a number of these firms have joined their multinational counterparts in shedding more jobs on the mainland.
Tesla employees seen at work at the electric carmaker’s Shanghai Gigafactory on December 22, 2023. Photo: Xinhua

Only a few dozen employees at the Shanghai plant were told to leave, representing a tiny portion of the 20,000-strong workforce involved in the assembly of Tesla’s Model 3 and Model Y vehicles, but some showrooms across China are likely to face closure, the Post reported on Tuesday.

Meanwhile, the lay-offs announced earlier this month by Amazon Web Services (AWS), the cloud computing services unit of Amazon, have affected an undisclosed number of people, according to a report by Chinese media Leiphone. The report said that the severance pay for certain employees was triple the amount of their average local salary.

However, AWS said the report was “factually wrong” in terms of the compensation, adding that it “is continuing to hire and grow, especially in core areas of [its] business”.

On the job cuts, AWS “has identified a few targeted areas of the organisation [that it] needs to streamline” and the firm is “committed to supporting the employees throughout their transition to new roles in and outside Amazon”, AWS said, adding that the company “is continuing to hire”.

US semiconductor maker Intel is expected to further reduce its workforce on the mainland. Photo: Shutterstock

An AWS employee, who asked not to be identified, said that “the rising wind forebodes a coming storm”, citing an old Chinese poem about negative signs. Another Amazon employee at a non-AWS unit said that some colleagues were just waiting to be sacked and get their severance pay.

US chip maker Intel, which initiated a new round of lay-offs earlier this month at its sales and marketing unit, could see its mainland China operations affected as early as this week, according to a report by Taiwan newspaper Economic Daily News, citing industrial rumours.

Intel did not immediately respond to an inquiry on Friday.

In spite of the retrenchment across the tech sector, China’s overall unemployment has remained flat. The overall urban unemployment rate stood at 5.2 per cent in March, compared with 5.3 per cent in the first two months of the year.

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