IBM Lenovo sale at risk

It seems that US paranoia over Chinese spying is set to derail the proposed $2.3 billion sale of IBM’s low end server business.

Approval of the deal was expected to be automatic; after all, Lenovo has been selling old IBM PCs to US government for ages with no problems.

However the US government has put the deal in limbo while its spooks apparently investigate “national security issues”.

Apparently US security officials and members of the Committee on Foreign Investment in the United States (CFIUS) are worried that IBM’s x86 servers used in communications networks and in data centres supporting the Pentagon’s networks could be accessed remotely by Chinese spies or compromised, the newspaper reported.

Lenovo bought IBM’s money-losing ThinkPad business for $1.75 billion, which had faced scrutiny, but was approved with no real debate. But it is clear that this time government officials are trying to derail the deal.

They are uneasy about the potential sale of servers that may be clustered together to perform like a powerful computer.

IBM and Lenovo are trying to address CFIUS concerns about server maintenance and have said that IBM will provide maintenance on Lenovo’s behalf “for an extended period” after the sale.

Meanwhile IBM and Lenovo have refiled their application for approval of the deal to buy more time.

If the deal falls through then IBM could be in trouble. The division has not made money for a while now and Big Blue was keen to lose it. There is no buyer on the horizon either. Did we mention it was a loss maker?

But equally pressure on Lenovo is unfair and seems to be geared to sending a message to Beijing that the US Empire is the only one which is allowed to spy on anyone.