US Security Fears Could Spike Lenovo’s IBM Server Deal

IBM and Lenovo are apparently struggling to find ways to dispel US security concerns that look like stalling the proposed sale of IBM’s x86 server business to the Chinese IT giant.

The deal was agreed in January but IBM’s servers are widely used in government communications networks and data centres, and US authorities have raised fears that Lenovo might enable Chinese spies to access these systems. As a result, the $2.3 billion (£1.35bn) deal is now “in limbo” according to the Wall Street Journal, and may not be completed.

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Foreign deals have to be scrutinised by the Committee on Foreign Investment in the US, for possible impact on national security, and the two firms have been asked to re-file their application for the deal, giving answers to specific security questions.

The US has an increasingly distrustful relationship with both China and its leading firms.  Network giant Huawei has faced criticism from US authorities and scaled its American presence down, while denying any involement in Chinese spying and expressing its own outrage at the NSA’s activities in China.

The committee approved Lenovo’s purchase of IBM’s PC business in 2005, but since then reports have surfaced of  “security incidents” involving Lenovo PCs, which are now banned on classified US networks.

IBM and Lenovo still say the deal is expected to go through, pointing out that these are low-end servers, not giant mainframes, which are already made under contract in China, so little would change in practice if the deal goes through.

However, US officials are concerned that x86 servers can be clustered together and are displacing larger servers. There is also concern that maintenance for IBM’s low-end servers will pass to Lenovo, after a period in which IBM will provide the service, potentially giving China access to US government servers.

How about this? We have a quiz on IBM and one on Lenovo!