Amazon winds down its artificial intelligence research lab in Shanghai, marking a significant shift in the tech giant’s strategic direction in China. The lab, established in 2018 by Amazon Web Services (AWS), has been central to the company’s AI research efforts in the region, but now faces closure as part of a broader restructuring, according to a report by theFinancial Times.

The move follows recent job cuts across AWS, with Amazon last week confirming that it had reduced hundreds of roles globally. While the company did not directly address the closure of the Shanghai lab, a spokesperson reiterated that some positions were being eliminated across AWS. The spokesperson declined to comment specifically on the FT report.

Amazon maintained that the recent layoffs are not primarily driven by the company’s increasing reliance on generative AI tools, a statement that appears to contrast with CEO Andy Jassy’s previous warning of potential workforce reductions linked to the growing adoption of AI technologies.

Amazon winds down US China friction

According to the Financial Times, Wang Minjie, a scientist formerly based at the Shanghai AI lab, suggested in a WeChat post that the team was “being dissolved due to strategic adjustments amid US-China tensions.” While the exact number of staff affected remains unclear, the decision underscores the mounting operational challenges faced by American tech firms in China.

The development comes at a time of heightened scrutiny from Washington on US businesses operating in China, as geopolitical friction between the two global powers continues to escalate. These tensions, coupled with tighter regulatory oversight, appear to be influencing strategic decisions by multinational corporations.

Amazon has yet to publicly confirm the closure of the Shanghai lab or provide further details regarding its future presence in China.

By the close of March, Amazon was said to be the second-biggest private employer in the United States, trailing only Walmart Inc. The company’s total headcount stood at approximately 1.56 million. While most of these roles involve warehouse operations such as packing and logistics, more than 350,000 employees are in corporate roles.

(With inputs from Reuters)