IBM CEO Calls for Increased AI R&D Funding

IBM CEO Advocates for Increased Federal AI Research Funding

Arvind Krishna, CEO of IBM, aligns with numerous technology sector leaders in asserting the necessity of increased—rather than decreased—federal investment in research and development concerning AI and associated technologies.

In a recent interview with TechCrunch, Krishna explicitly stated both his personal and IBM’s strong advocacy for expanded federally funded R&D. He affirmed this position as unequivocal, emphasizing a firm belief in its importance.

Shifting Priorities and Budget Cuts

The stance taken by President Donald Trump and his administration contrasts sharply with previous administrations, prioritizing significant reductions in federal grants and scientific research programs.

Recent weeks have witnessed substantial budget cuts impacting the Directorate for Technology, Innovation and Partnerships (TIP), a crucial federal office dedicated to AI research.

Impact on Key Agencies

Furthermore, numerous positions at the National Institute of Standards and Technology and the National Science Foundation (NSF)—the home of TIP—are facing elimination.

The proposed budget for fiscal year 2026 calls for Congress to reduce the NSF’s funding by over 50%, citing wasteful and purportedly “woke” expenditures.

This reduction places billions of dollars allocated to AI R&D projects—administered by the NSF, National Institutes of Health, and the Department of Energy—at risk.

Threats to the CHIPS Act

President Trump has also indicated a potential termination of the CHIPS Act, a significant initiative of the Biden administration designed to bolster domestic semiconductor production, including specialized chips vital for AI.

The office responsible for managing CHIPS Act funds experienced considerable downsizing in early March.

Industry Concerns and Economic Returns

Technology industry associations, such as the Software and Information Industry Association, have communicated their concerns to White House AI “czar” David Sacks and Commerce Secretary Howard Lutnick.

These letters warn that the reductions could jeopardize America’s leading position in the global AI landscape.

The U.S. Joint Economic Committee reports that federally funded research generates annual returns of 25% to 40%, exceeding the 15% to 27% returns typically achieved by top-performing venture capital funds.

The Importance of Federal Investment

Krishna emphasized that current federal R&D funding is at historically low levels as a percentage of GDP.

He believes increased federal investment will positively influence the economy, foster economic growth, enhance U.S. competitiveness, and support the development of technologies crucial for the future.

IBM's Experience with Cutbacks

IBM has directly experienced the effects of these federal cutbacks.

During its Q1 earnings call in April, the company announced the cancellation of 15 federal contracts, representing $100 million in lost future revenue.

Federal contracts currently comprise between 5% and nearly 10% of IBM’s consulting business.

Outlook for the Future

While acknowledging the relatively small proportion of IBM’s overall business derived from federal funding, Krishna expressed optimism that government R&D spending will increase within the next year.

He anticipates that within a year, federally funded R&D for AI, quantum computing, and semiconductors will be in as good or better condition than it is presently.