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Security concerns delay IBM deal with Lenovo

CeBIT 2011CeBIT 2011

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.