Business

IBM to close $90m technology park in Tampines

It could cost up to 600 jobs, manufacturing of IBM Z to move to New York

Global tech giant IBM is shutting its $90 million technology park in Tampines, costing up to 600 jobs in Singapore and moving production of its high-end computer systems to the US.

The move comes as analysts expects IBM to report weaker earnings, down around 3 per cent for its first quarter at the close of trading in the US yesterday in part due to an ageing mainframe product cycle.

The US company will move the manufacturing of its mainframe computers IBM Z from Singapore to Poughkeepsie in New York.

It is part of "IBM's continual review of the most efficient way to source our products", IBM said in a statement.

It has declined to reveal details of its retrenchment exercise in Singapore but Today has reported that up to 600 workers would be laid off by July at the company's manufacturing plant in Tampines.

A spokesman for the Ministry of Manpower has said that IBM had notified it of the retrenchment exercise.

For workers who are retrenched, Workforce Singapore and the National Trades Union Congress' Employment and Employability Institute will offer employment services support through the Adapt and Grow initiative, said the spokesman.

The United Workers of Electronics and Electrical Industries executive secretary Melvin Yong said the union is working closely with IBM to help the affected workers.

IBM has stressed that Singapore remains a strategic location for the company as its Asia-Pacific headquarters and its Watson Centre, cloud data centre, blockchain and other services units will remain operating on the island.

"IBM has been in Singapore for 66 years. It remains committed to being an essential part of its growth and is working with many companies in Singapore to enhance its position as a worldwide innovation hub," said an IBM statement.

When the Tampines plant was set up in 2010, the company hailed it as one of the world's most technologically advanced manufacturing facility to serve high-end clients across Asia, Africa and Europe.

But in recent years, IBM has been facing increasing pressures due to declining sales of hardware servers as clients move into cloud computing.

"The company continues to face structural risk from its installed base of clients migrating towards cloud and open source competitors in the long-term due to IBM's under-investment in cloud and relatively closed strategy," analyst Ari Terjanian of Cleveland Research company wrote in a note.

BUSINESS & FINANCE