IBM, Lenovo Deal Passes US Security Review

International Business Machines Corp. announced on August 15 that a US national security review panel approved its plan to sell its x86 low-end server business to China’s Lenovo Group Ltd. for $2.3 billion.

After reaching the agreement back in January, both companies hope to close the deal by years end.

The Committee on Foreign Investment in the US (CFIUS) spent 150 days investigating the deal for potential security issues after the Pentagon raised concerns that the x86 servers could be used to launch a cyberattack against US systems. The x86 servers are used in US communications networks and data centers connected to the Pentagon, The Wall Street Journal reported.

CFIUS asked hundreds of questions during the investigation about whether routine maintenance to the servers could potentially allow Lenovo or Chinese government agents to access sensitive information, according to Bloomberg.

A Bloomberg source was cited as saying that CFIUS approved the transaction with several unidentified but “insignificant” conditions.

If the deal goes through as expected, Lenovo hopes to compete against Hewlett-Packard and Dell in the international market for servers. IBM sees the deal as a way to orient its business toward more profitable service-oriented products and away from less profitable hardware.

Photo credit Steven Damron via Flickr