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Chinese bought division of IBM that manufactures computing servers for U.S. Navy Aegis cruisers

U.S. Navy

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(NaturalNews) IBM's decision to sell one of its manufacturing divisions to a Chinese firm could not only damage U.S. national security; it will also cost taxpayers plenty of money.

The American technology giant recently inked a deal with Chinese computer maker Lenovo involving IBM's division that manufactures servers for the U.S. Navy's upgraded Aegis Combat System, one of the most formidable nautical offensive and defensive systems on the planet.

According to USNI News (U.S. Naval Institute), the $2.1 billion sale was closed in October, making Lenovo the number three server manufacturer in the world.

That's just business, right?

Not so fast. The report noted:

IBM shedding its server business creates a security concern for the U.S. Navy, which included the company's x86 BladeCenter HT server in its Aegis Technical Insertion (TI) 12. The TI-12 hardware upgrades, along with Advanced Capability Build (ACB) 12 software upgrades, compose the Aegis Baseline 9 combat system upgrade that combines a ballistic missile defense capability with anti-air warfare (AAW) improvements for the Navy's guided missile cruiser and destroyer fleets.

"The Department of Homeland Defense identified security concerns with the IBM Blade Center sale and placed restrictions on federal government procurement of Lenovo Blade Center server products," a Navy spokesman told USNI News.

Some U.S. government agencies still won't use Lenovo products

The Wall Street Journal reported in August that the deal had passed U.S. national security scrutiny. The little-known Committee on Foreign Investment, which is comprised of the heads of various Cabinet-level agencies, approved the sale and technology transfers associated with it.

However, WSJ also noted that the top military concern was that the servers could be compromised, either via routine maintenance or through remote access by Chinese government operatives.

Both Lenovo and IBM said that x86 servers are a low-end technology that is also manufactured by other American companies, and that the majority of servers - including those made by IBM - are made in China and thus contain Chinese components.

However, Lenovo faced similar questions and concerns when it purchased IBM's PC business in 2005. Then, as now, the sale was approved by regulators, but some "sensitive arms of the U.S. government" - most likely military and intelligence agencies - "have shied away from using Lenovo products," WSJ reported.

As for the U.S. Navy's Aegis systems, USNI News reported that the Program Executive Office for Integrated Warfare Systems' Aegis program office "is evaluating alternate processing solutions to mitigate the impact of the IBM Blade Center sale," in conjunction with the Department of Defense Committee on Foreign Investment in the United States Mitigation Development and Compliance Monitoring Team.

"We do not expect any significant Aegis schedule or cost impacts," he added.

Chinese buying legacy American media as well

The maker of the Aegis Combat System, defense contractor Lockheed Martin, is participating in the effort to find a replacement server, said the company's spokeswoman, Rashi Ratan, in a statement to USNI News.

"Options do exist; however, it is a matter of matching specified requirements to available technologies, conducting environmental qualifications and integration testing of those options, in conjunction with the Navy, to ultimately select an appropriate course of action," she told the news agency.

Chinese companies have made numerous purchases of American firms in recent years, including American media companies.

One of them is legacy financial news media company Forbes. In 2014, after remaining a family-owned enterprise for 97 years, current CEO and editor-in-chief Steve Forbes agreed to sell the media company to Hong Kong-based Integrated Whale Media Investments for an undisclosed sum.

"While today marks a fundamental turning point in this 97-year-old company founded by my grandfather, it should be seen as an opportunity to continue and strengthen our mission," Forbes said at the time.






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