Microsoft offers relocation to hundreds of China-based AI staff amid U.S.-China tech tensions
A man walks past Microsoft’s local headquarters in Beijing on July 20, 2021.
Noel Celis | Afp | Getty Images
Microsoft has reportedly asked China-based cloud computing and artificial intelligence operations employees to consider relocating out of the country, as Washington cracks down on Beijing’s access to the advanced technology.
The Wall Street Journal broke the story on Thursday, reporting that the staff, mostly comprising Chinese engineers, had been offered the opportunity to transfer to countries including the U.S., Ireland, Australia, and New Zealand, according to unnamed sources.
One source told WSJ that Microsoft had made the offer to about 700 to 800 people in total who were involved in machine learning and other work related to cloud computing.
CNBC could not independently verify the report.
In a statement shared with CNBC, a Microsoft spokesperson confirmed that the company had “shared an optional internal transfer opportunity with a subset of employees” without supplying details on the number and affiliation of staff affected.
“We remain committed to the region and will continue to operate in this and other markets where we have a presence,” the spokesperson said, adding that the potential transfers would not impact operations.
Microsoft employs roughly 7,000 engineers for its Asia-Pacific research-and-development group, with most of this workforce based in China, the WSJ reports.
The move comes amid U.S. efforts to prevent China from developing cutting-edge AI technology, which could be used for military purposes. In the past two years, the U.S. has placed waves of restrictions on China limiting its ability to buy advanced chips and chip-making equipment that can be deployed to train AI models.
Now, the Biden administration is looking to place new guardrails on the export of advanced AI models, such as the large language model that powers Microsoft-backed ChatGPT, according to recent reports.
There is currently little government oversight stopping companies like Microsoft, one of the U.S.’s largest cloud-computing and AI players, from selling or offering AI model services to foreign entities.
The U.S. reportedly fears that AI models, which mine vast amounts of data to generate content, could be used for cyber attacks or to create biological weapons.
Earlier this year, Microsoft released a report stating that state-backed hackers from Russia, China, and Iran had been using tools from OpenAI to hone their skills and support their hacking campaigns.
Microsoft has been deeply ingrained in China for more than three decades, even as other Western tech companies were pushed out by strict regulation. The company says that China is home to its largest R&D center outside of the U.S.
Matt Garman, CEO of Amazon Web Services, speaks during The Wall Street Journal’s Tech Live conference in Laguna Beach, California, on Oct. 21, 2024.
Frederic J. Brown | AFP | Getty Images
Amazon said revenue in its cloud unit increased 19% in the third quarter, just missing analyst estimates.
Revenue at Amazon Web Services totaled $27.45 billion, according to a statement Thursday, while Wall Street was expecting $27.52 billion, based on StreetAccount estimates. Year-over-year growth has accelerated for five consecutive quarters.
The artificial intelligence portion of AWS is in the billions of dollars in annualized revenue, more than doubling year over year, Amazon CEO Andy Jassy, who previously led AWS, said on a call with analysts.
“I believe we have more demand than we could fulfill if we had even more capacity today,” Jassy said. “I think pretty much everyone today has less capacity than they have demand for, and it’s really primarily chips that are the area where companies could use more supply.”
AWS leads the cloud infrastructure market over Google and Microsoft and is an important source of profit for Amazon.
On Tuesday, Google parent Alphabet said revenue from Google Cloud, which includes cloud applications as well as infrastructure, totaled $11.35 billion, up 35%. Microsoft said Wednesday that revenue from Azure and other cloud services grew 33%.
AWS recorded $10.45 billion in operating income, representing 60% of its parent’s profit. Analysts expected $9.15 billion.
The unit’s operating margin came in at 38%, the widest for AWS since at least 2014. Google Cloud reported an operating margin of 17%.
“We’re being very measured in our hiring,” Brian Olsavsky, Amazon’s finance chief, said on the call.
During the quarter, Oracle said it will bring database services to AWS.
“If this is successful, we would love to find more pieces of their application stack that could run well in AWS and help customers do that,” AWS CEO Matt Garman told CNBC in a September interview.
Also in the quarter, AWS announced plans to discontinue some services, including code-repository tool CodeCommit. Garman told TechCrunch that AWS “can’t invest in everything.”
WATCH: Databricks drives more than $1 billion revenue on AWS, says Databricks’ Naveen Rao
Dominika Zarzycka | Nurphoto | Getty Images
Amazon’s online advertising business brought in $14.3 billion in the third quarter, up 19% year over year, in line with analysts’ estimates of $14.3 billion.
The Seattle tech giant revealed the financial results of its growing advertising unit as part of its latest earnings report Thursday. Amazon’s overall third-quarter sales were $158.9 billion, ahead of analysts’ estimates of $157.2 billion.
Amazon’s online advertising business is still a fraction of the company’s overall business, but its growth over the years has made it a major competitor to Alphabet and Meta, which lead the digital advertising market. Alphabet’s Google currently represents 27.7% of the worldwide digital advertising market, followed by Meta at 22.8% and Amazon with 8.8%, according to data provided to CNBC by Emarketer.
Meta’s third-quarter advertising revenue came in at $39.9 billion, which was up 19% compared with the year prior. That was slightly ahead of analysts’ expectations of $39.49 billion, according to StreetAccount. Ads accounted for 98.3% of Meta’s overall third-quarter revenue.
Alphabet generated $65.85 billion in third-quarter ad revenue, the company reported Tuesday. That was up 10% from $59.65 billion the year prior. Additionally, advertising sales for the company’s YouTube unit rose 12% year over year to $8.92 billion.
Intel CEO Pat Gelsinger holds an artificial intelligence processor as he speaks during the Computex conference in Taipei, Taiwan, on June 4, 2024.
Annabelle Chih | Bloomberg | Getty Images
Intel shares rose 9% in extended trading on Thursday after the chipmaker reported better-than-expected revenue and issued quarterly guidance that topped estimates.
Here’s how the company did in comparison with LSEG consensus:
- Earnings per share: Loss of 46 cents adjusted
- Revenue: $13.28 billion vs. $13.02 billion expected
Intel’s revenue declined 6% year over year in the quarter, which ended on Sept. 28, according to a statement. The company registered a net loss of $16.99 billion, or $3.88 per share, compared with net earnings of $310 million, or 7 cents per share, in the same quarter a year ago.
As part of its cost reduction plan, Intel recognized $2.8 billion in restructuring charges during the quarter. There were also $15.9 billion in impairment charges.
Intel has been mired in an extended slump due to market share losses in its core businesses and an inability to crack artificial intelligence. CEO Pat Gelsinger revealed plans during the quarter to turn the company’s foundry business into an independent subsidiary, a move that would enable outside funding options.
CNBC reported that Intel had engaged advisors to defend itself against activist investors. In late September, news surfaced that Qualcomm reached out to Intel about a possible takeover.
The Client Computing Group that sells PC chips recorded $7.33 billion in revenue, down about 7% from a year earlier and below the $7.39 billion consensus among analysts surveyed by StreetAccount.
Revenue from the Data Center and AI segment came to $3.35 billion, which was up about 9% and more than the $3.17 billion consensus from StreetAccount.
Intel called for fiscal third-quarter adjusted earnings of 12 cents per share and revenue between $13.3 billion and $14.3 billion. Analysts had expected 8 cents in adjusted earnings per share and $13.66 billion in revenue.
During the quarter, Intel announced the launch of Xeon 6 server processors and Gaudi artificial intelligence accelerators.
As of Thursday’s close, Intel shares were down about 57% in 2024, while the S&P 500 index had gained 20%.
Executives will discuss the results with analysts on a conference call starting at 5 p.m. ET.
This is breaking news. Please check back for updates.
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