China approves IBM, Lenovo server deal

China approves IBM, Lenovo server deal

Summary: China has approved Lenovo's proposed buy of IBM's low-end server business for $2.3 billion.

SHARE:
TOPICS: China, Hardware, IBM, Lenovo
3

China has approved Lenovo's proposed buy of IBM's x86 server business, leaving only US regulators to decide whether to support the purchase.

Screen Shot 2014-07-04 at 09.22.05

According to Reuters, the Chinese Ministry of Commerce anti-monopoly department has approved the acquisition, but Lenovo still requires approval from US authorities to go ahead.

Lenovo's purchase of IBM's low-end server business was announced in January. The deal, worth $2.3 billion, gives the Chinese PC maker control of IBM's x86 servers, blade networking and maintenance operations. The acquisition will impact thousands of employees, of which have been offered places on Lenovo's payroll.

Lenvo CEO Yang Yuanqing hopes the deal will be finalized by the end of the year, and does not believe regulatory bodies will prevent the purchase from occurring.

US security officials and members of the Committee on Foreign Investment in the United States (CFIUS), however, may have a different opinion. In June, it was reported that US regulators are concerned that national security may be weakened, and "Chinese spies" may be able to access the Pentagon's servers.

The issue is servers, currently belonging to IBM, which support the Pentagon's networks. Under the terms of the acquisition, Lenovo would take over maintenance of these servers — which may pave the way for weakened security. The US and China have exchanged criticism and blows over cybersecurity in recent years, and both sides have accused each other of spying and cyberattacks.

Yang, however, said at a press conference that "If you look at our history, with domestic and overseas clients, there have never been any issues regarding security."

Topics: China, Hardware, IBM, Lenovo

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

3 comments
Log in or register to join the discussion
  • If IBM were buying Lenovo

    I am sure they would not ok the deal
    calfee20
  • Was there ever any doubt that China would approve this?

    The friction for this deal (as clearly stated in the article) involves the U.S. government.
    Rabid Howler Monkey
  • The security is first it

    The security of USA cannot have open doors that can cross in the future, the purchase of IBM servers it is a great risk and it USA it should protect rejecting the sale
    luis river