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Cybersecurity

Security concerns delay IBM deal with Lenovo

By
Benjamin Snyder
Benjamin Snyder
Managing Editor
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By
Benjamin Snyder
Benjamin Snyder
Managing Editor
Down Arrow Button Icon
June 26, 2014, 6:57 PM ET
CeBIT 2011
HANOVER, GERMANY - FEBRUARY 28: A woman walks past the IBM logo at the CeBIT technology trade fair the day before the fair's official opening on February 28, 2011 in Hanover, Germany. CeBIT 2011 will be open to the public from March 1-5. (Photo by Sean Gallup/Getty Images)Sean Gallup—Getty Images

As IBM seeks to complete a $2.3 billion sale of its server business to China’s Lenovo, the U.S. is worried.

Although the deal was made in January, little has happened in the months since as the two tech companies try to resolve security concerns raised by the U.S. government, which is currently investigations the matter.

But what has the U.S. worried? IBM’s x86 servers are used in some of the country’s most sensitive networks including by the Defense Department and the U.S. Air Force, according to anonymous sources cited by the Wall Street Journal. These servers may be open to attack by Chinese spies or hackers if the deal goes through, according to U.S. security officials and members of the federal Committee on Foreign Investment, an interagency group that reviews transactions involving foreign companies.

But in their defense, IBM and Lenovo say that the technology used in the x86 servers is made by many other companies in the U.S. and that they contain Chinese components. Meanwhile, Lenovo says that it will only use the servers for commercial goals.

The deal should still be approved despite the pushback, according to the Wall Street Journal’s sources, and a decision is expected by the year’s end.

In order to meet the concerns raised by the U.S., the companies say that IBM will actively have a stake in maintaining the servers, although that has also drawn worry from the U.S. government. Similar concerns were also raised in 2005 when Lenovo purchased IBM’s personal-computer business.

About the Author
By Benjamin SnyderManaging Editor
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Benjamin Snyder is Fortune's managing editor, leading operations for the newsroom.

Prior to rejoining Fortune, he was a managing editor at Business Insider and has worked as an editor for Bloomberg, LinkedIn and CNBC, covering leadership stories, sports business, careers and business news. He started his career as a breaking news reporter at Fortune in 2014.

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