News

Is it really true? Is the IBM-China link a security risk?

All last week, we were laughing. Some clown had spread a rumour that IBM's plan to sell off its personal computer business to a Chinese firm was to be investigated by Bush's Government as a "security threat" - and obviously, that's nonsense. Or...

Well, it's nonsense, obviously; but it's not a hoax. Or, if it is, several big papers fell for it. The  Washington Post (registration) says that the Committee on Foreign Investments in the United States (CFIUS) usually clears such purchases within 30 days of a relatively simple review.

"That period would expire this week," said the report, "but the deal will now be subject to more thorough scrutiny for an additional 45 days, after which the committee may recommend to President Bush whether to allow it."

The Silicon Valley source, the San Jose Mercury, also had to take the story seriously, quoting precedent: "In October 2000, Dutch chip-equipment company ASM International announced plans to buy Silicon Valley Group of San Jose for $1.6 billion. But the acquisition was postponed by national-security concerns over the company's Tinsley Labs business, whose mirror-polishing technology was used in spy satellites."

The investigation not only held the sale up for several months, but it also meant that American shareholders saw the company sold for $1.2 billion, instead of the $1.6 bn that was originally offered.

IBM staff, according to the Financial Times, have described the investigation as "appropriate and effective."

According to USA Today, the request to make the investigation more rigorous than a mere rubber stamp comes from Republican Congressmen Don Manzullo and Henry Hyde of Illinois and Duncan Hunter of California.

"Manzullo says he's worried about Lenovo's ties to China's communist government. With its backing, the new firm could undercut computer markets around the world," the paper quoted the Congressman. He then went further, and pointed out that IBM has offices in the US, in high-tech communities. "That could lead to industrial espionage," he said.

No, it's not a joke, apparently. And China Daily, naturally, is indignant: "We respect their laws which focus on the sale of high-tech products. But," it asked quite reasonably, "the question here is: Is the humble computer actually a high-tech product?"

And more to the point, do American Government representatives really not know where IBM has been building its PCs for the past four years?