Feds Probe IBM-Lenovo Deal Over Servers at Pentagon

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ibmlenovoOver at Bloomberg News, David McLaughlin and Alex Barinka write that Lenovo must convince government officials that buying the x86 server unit from IBM won’t give China back-door access to U.S. secrets and infrastructure. At issue is the fact that the Pentagon, the FBI, and the nation’s biggest telecommunications companies all buy IBM servers, which will spark close scrutiny from the Committee on Foreign Investment, the interagency group that investigates national-security risks of foreign acquisitions of domestic companies.

It’s kind of the perfect storm of issues,” said Anne Salladin, a former Treasury Department official who worked on CFIUS reviews and is now at Stroock & Stroock & Lavan LLP in Washington. “Any foreign acquirer with this kind of asset purchase is very likely to be something that CFIUS would want to take a look at.”

Whether or not the government blocks the deal may be a moot point. Sources tell insideHPC that a number of government agencies are already putting plans in place to oust IBM equipment from their datacenters. This represents a huge opportunity for the competition, and companies such as Cray, HP, and Dell are waiting in the wings.


bubbleRather than saying, “We told you so,” we thought it might be time to revisit this Radio Free HPC podcast that examined these issues after the deal was announced.

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In related news, IBM has posted a new site that explains the technical aspects of the Lenovo deal in plain English.