May 26, 2024

Microsoft is reportedly asking hundreds of its employees in China to consider relocating outside of the country amid growing tensions between the U.S. and China.

Around 700 to 800 employees, mostly Chinese nationals working in cloud computing and artificial intelligence, were given an offer to relocate to other countries including the U.S., Ireland, Australia, and New Zealand, the Wall Street Journal reported, citing unnamed people familiar with the matter. The offers were reportedly made earlier this week, and employees, who also have the choice to stay in China, have until June to decide.

Employees were told relocating would boost Microsoft’s cloud computing and AI efforts around the world, the Journal reported. Analysts told the Journal that China’s AI efforts would take a hit from Microsoft employees relocating outside of the country.

A Microsoft spokesperson confirmed with Quartz it had offered employees the option to relocate, but that the company remains “committed to the region and will continue to operate in this and other markets where we have a presence.”

“Providing internal opportunities is a regular part of managing our global business,” the spokesperson said. “As part of this process, we shared an optional internal transfer opportunity with a subset of employees.”

Earlier this week, the Biden administration announced new tariffs increases on $18 billion worth of imported goods from China, including electric vehicles and semiconductors. The new tariffs increases are meant “to protect American workers and business” and “counter China’s unfair trade practices,” such as “flooding global markets with artificially low-priced exports” in strategic sectors the U.S. is already investing in, according to the White House. The U.S. is increasing the tariff rate on semiconductors from 25% to 50% by 2025, and increasing the tariff rate on electric vehicles under Section 301 from 25% to 100% this year.

Meanwhile, China responded that it “firmly opposes” the tariffs increases that “contradicts President Joe Biden’s commitment to ‘not seek to suppress and contain China’s development’ and ‘not to seek to decouple and break links with China.’” China’s Commerce Ministry said the new tariffs “will seriously impact the atmosphere of bilateral cooperation,” CNN reported.

The U.S. has tightened controls over advanced chipmaking exports from U.S. companies to China as part of an effort to curb technological and military advances in the country. The Biden administration is also considering new rules to require cloud computing companies based in the U.S., including Microsoft, to get a license to sell advanced AI computing power to China, the Journal reported. Under the Trump administration, some U.S. tech companies, including Intel, were issued a license to sell to Chinese firms on the U.S.’s trade blacklist.

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