Chinas big layoff wave now buffeting its tech sector

China’s long‑running wave of corporate layoffs is spreading from manufacturing and property to the technology sector, with some key firms cutting hundreds of engineering jobs as core businesses weaken and artificial intelligence (AI) growth remains uneven.

Recent job cuts at Baidu and Lenovo’s Infrastructure Solutions Group (ISG), alongside years of downsizing at Alibaba Group, show technology is no longer insulated from China’s broader slowdown and job losses.

China’s jobless rate for 16-to-24-year-olds, excluding college students, stood at 17.3% in October, slightly down from 17.7% the month prior, the most recent data from the National Bureau of Statistics showed, according to a Reuters report.

The unemployment rate for 25-to-29-year-olds, excluding students, remained unchanged at 7.2% from a month earlier, while the jobless rate for 30-to-59-year-olds fell to 3.8% from 3.9%, the data showed. It’s not immediately clear how the recent wave tech layoffs will impact those figures.

Baidu began a year‑end workforce adjustment in late November, affecting multiple business lines, according to Chinese media reports. Some non‑core departments reportedly faced layoff ratios of 20-30%.

Severance packages were reportedly set at n+3 months, with some employees getting n+5, where “n” refers to the number of years of service at the company.Affected staff are required to complete handovers before the end of December.

The layoffs followed a deterioration in Baidu’s third-quarter performance, particularly in its core advertising business. In the three months ended September 30, Baidu’s online marketing revenue fell 18% year‑on‑year to 15.3 billion yuan (US$2.16 billion), a decline that exceeded market expectations and occurred despite a 1% increase in monthly active users on its app.

By contrast, AI‑related non‑online marketing revenue, including cloud services, autonomous driving unit Apollo Go and smart home devices such as Xiaodu, rose 21% to 9.3 billion yuan. iQiyi, Baidu’s online video streaming subsidiary, saw revenue decline 8% to 6.7 billion yuan.

While AI revenue growth has remained positive, its pace slowed sharply from the second quarter, when it grew 34% year‑on‑year. The third‑quarter increase in the AI segment was largely due to a low base last year.

“AI businesses now account for about 30% of Baidu’s revenue, compared with 58% from advertising and 12% from iQiyi,” writesLynne, a columnist for Xueqiu.com, a financial news website. “Even if AI revenue can sustain annual growth of around 20%, it would take about three years for AI to reach 50% of total revenue.”

She adds that if advertising and iQiyi revenues continue to decline, AI growth would at best be enough to offset those losses rather than restore overall growth.

“Most AI revenue comes from capital‑intensive businesses such as cloud services or Apollo Go,” she says. “These are far more expensive to operate than advertising, which means that even if AI revenue eventually matches advertising in size, its profit contribution could still be lower.”

Relocation to India

Lenovo’s ISG, which supplies enterprise customers with data center and edge-computing infrastructure such as servers and storage systems, became the focus of public attention on December 1, when a mass layoff unfolded at its Shanghai operation.

What had been scheduled as an online staff briefing for China’s ISG unit began 13 minutes late and ended with a two-minute pre-recorded audio message about the company’s downsizing plan for software, firmware and operating system teams in China, according to multiple media reports. A total of about 270 people were sacked, including all staff at the Shanghai site and others in Beijing, Tianjin and Shenzhen.

Lenovo’s 2024/25 annual report showed ISG revenue surged 63% year‑on‑year to a record $14.5 billion, with China-based revenue doubling in a single quarter. But the growth masked profitability strains. In the six months ended September 30, ISG recorded an operating loss of about $118 million, its third consecutive half‑year loss, following deficits of $114 million and $73 million in the previous two periods.

“Since new chief technology officer Tolga Kurtoglu took office in July 2024, Lenovo has been pushing a strategy of globally centralized research and development resources,” a Beijing‑based columnist writing for Sina Finance says. “The Bangalore research center in India continues to expand, while China’s software teams, with higher labor costs, have become a key target for optimization.”

“Besides, ISG appears to be moving away from a software‑hardware integration model toward a more hardware‑centric approach,” the columnist adds. “Some lower‑return basic software teams are being stripped out, while resources are being concentrated on higher‑margin areas such as AI infrastructure and liquid‑cooling technologies.”

“The core obstacle for Lenovo to improve its profitability is the lack of proprietary technologies,” says Zhang Xiaorong, director of the Jiangsu‑based Deep Institute.“Key elements of Lenovo’s AI solutions, including chips and large language models, rely heavily on external partners, leaving the company without strong technological barriers.”

He also says that Lenovo faces intense competition from major technology companies across multiple fronts, while lacking clear innovation advantages of its own.

AI deepens economic drag

Over the past several years, China’s property and manufacturing sectors have steadily shrunk. In manufacturing, many electronics producers have shifted capacity to Southeast Asia — including Vietnam, Thailand and Indonesia — to cut costs and avoid punitive US tariffs, leaving large numbers of low‑paid factory workers jobless.

The property sector has followed a similar path. The collapse of China Evergrande Group in late 2021, followed by failures among smaller developers, triggered layoffs across construction, property agencies and supplier networks. The job losses have squeezed household incomes and consumption, increasing pressure on internet and technology companies that rely on advertising and discretionary spending.

Beyond the economic slowdown, AI adoption has emerged as a key driverof job cuts at major technology platforms inChina. Alibaba Group is following the footsteps of American technology companies, such as Amazon and Google, to reduce headcount as AI takes over labor‑intensive tasks.

Alibaba’s own disclosures point to the scale of adjustment underway among internet platforms. The company’s annual reports show that its full‑time workforce stood at254,941 as of March 31, 2022, andfell to235,216 in 2023 and204,891 in 2024. It fell further to 124,320 by March 31, 2025, though that sharp decline was mainly due to sales of subsidiaries.

“Alibaba’s workforce has shrunk from a peak of about 250,000 to fewer than 200,000, equivalent to wiping out the employment of a medium‑sized city,” says a Guangdong‑based columnist writing under the pen name Little Q. “This ‘surgery’ has taken place alongside a massive push into AI, with cloud intelligence teams still expanding while traditional business lines are streamlined.”

“When Pinduoduo can generate comparable gross merchandise volume (GMV) with just 8,000 employees, Alibaba realized that manpower alone no longer creates an advantage,” he says. “AI has replaced about half of the customer service workforce in Taobao, while Cainiao’s unmanned warehouses have lifted efficiency by more than 40%.”

A Chinese commentator says once-prestigious P8-level roles in Tencent have become a key layoff target as AI tools reduce the need for senior planning and coordination. She says P8 engineers are veteran technical specialists with annual base salaries typically ranging from 750,000 to more than 1.18 million yuan, roughly equivalent to the cost of three AI engineers. At the same time, AI-driven tools in gaming will replace large parts of art design and operations teams, the commentator said.

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