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Hardware Government Politics

US Government May Not Approve Sale of IBM PC Unit 358

andy1307 writes "Xinhua, among others, quotes a Bloomberg report saying the Committee on Foreign Investments in the United States, or CFIUS, might block the sale of IBM's PC unit to Lenovo over national security concerns. CFIUS is made up of 11 U.S. agencies, including the Department of Justice, the Department of Homeland Security, and is chaired by the Treasury Department. They are concerned Lenovo employees might be used to conduct industrial espionage. The Bloomberg story said members of CFIUS were focusing their attention on an IBM facility in North Carolina of the United States. The same article says IBM hasn't produced its own PCs for several years and that the bulk of its production is done by manufacturing partners, largely in China. In the past, CFIUS has blocked the sale of Global crossing to Hutchison Whampoa because it would have meant Chinese control of the undersea cable communication network."
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US Government May Not Approve Sale of IBM PC Unit

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  • by Dancin_Santa ( 265275 ) <> on Tuesday January 25, 2005 @07:05AM (#11466323) Journal
    There is very little good that come out of government meddling in the affairs of private companies when no one is being harmed. IBM wants to sell, Lenovo wants to buy. No harm, no foul.

    The Chinese are not the Red Menace they are made out to be. If anything, they are about as far from Red as you can get. More a yellowish-tan... But they are capitalists through and through.

    It's funny, the land of freedom and capitalism is taking steps that would make a communist plutocracy proud.
    • by vladd_rom ( 809133 ) on Tuesday January 25, 2005 @07:13AM (#11466343) Homepage
      >> IBM wants to sell, Lenovo wants to buy. No harm, no foul.

      There is no connection between the first sentence and the second. In order to determine if there is any harm or not, a lot of factors need to be considered, mainly related to whether or not a company will increase what economists call "market power" and will get closer to a monopol status.

      >> It's funny, the land of freedom and capitalism is taking steps that would make a communist plutocracy proud.

      There is such a term in economy called "market power", which describes companies that have key resources and strategic positions on the market. In those cases, the "invisible hand" of offer and demand, that balances prices on the market, no longer works, because a firm is clearly advantaged compared to the others and in a position to get a monopoly status (Does Microsoft ring any bells? :) ). In those cases, the government is expected and does regulate economic activity in order to re-balance the market.

      I'm not saying that this is the case here; however, simply adjusting the balance doesn't mark this approach as communist. Depending on your position on the political spectrum, you might find this implication of government into the market more or less suitable. Still, no matter that, it is still far away from communist.
      • by AvidLinuxUser ( 573832 ) on Tuesday January 25, 2005 @07:20AM (#11466365)
        Oh, they (government) really stopped Microsoft.

        More likly Microsoft reads slashdot too and is worry about IBM having more power in the linux market in China so Bill called his friends in the White house and Justice department.

    • There is very little good that come out of government meddling in the affairs of private companies when no one is being harmed

      You're exactly right, when no-one is being harmed! There's a very good reason for the gummint to meddle in this affair though: national security. You guys (ie: America) have a lot of tight restrictions on export of technology to try to keep a lid on The Bad Guys(tm) advancing their technology too quickly and becoming more of a military threat than they might otherwise be.

      Now I'll

      • by gunnk ( 463227 ) <gunnk@mail.f[ ] ['pg.' in gap]> on Tuesday January 25, 2005 @08:52AM (#11466910) Homepage
        I have a ThinkPad T41 on my desk right now. I flipped it over and found:

        "Made in China"

        Whether or not IBM sells its PC business to Lenovo, the technical information is already in China as is the actual manufacturing. So if our "national security" concerns are about the transfer of technical knowledge then it's too little-too late. If the concern is about having our important technology manufactured by a potential adversary, then it is also too little-too late.

        This looks more like meddling for the sake of flag-waving to me...
        • Which China? Goods made in Taiwan can also carry that label. It's an important distinction. I know of one large international company that was having its' laptops preloaded with software in China, and when those laptops were to be used by the group of the company that did Government business they had to completely re-image them just in case there were some Trojans planted. A LOT of large Chinese corporations have Government insiders in the management of the company, and they siphon off things they think are
      • Who modded this Insightful?

        No offense, but there is nothing Insightful about this post. Exactly what "great knowledge" would China gain by buying this PC division?

        These are basic PC's! There are no great government technologies hidden in the IBM PC division.

        You're exactly right, when no-one is being harmed!

        Oh, please. How is China harming the USA? Should we as Americans turn into nothing but fighters that try to destroy anyone that competes against us?

        I am a former U.S. Marine I served during t

    • by DNS-and-BIND ( 461968 ) on Tuesday January 25, 2005 @07:26AM (#11466384) Homepage
      Nah, the Chinese didn't grease the right people. These big government deals are all about graft, and who gets it. In the Jiang Zemin/Clinton era, times were happy...the Chinese paid, and the U.S. responded with whatever they wanted...satellite technology, nuclear secrets, influence in elections. However, the new administration of Hu Jintao evidently forgot to pay off the right people, and now the whole deal is in jeopardy. Play ball, people!
    • The Chinese are not the Red Menace they are made out to be.

      Yes, until they decide to get mad at Taiwan and invade. And because they now have many of our tech resources and capabilities, they could slap us down one way or another if we decide to take the wrong side. Like saying they won't hold anymore of our debt, which could lead to our dollar spiraling downward and worth less than a peso.

      Not to mention all of the human rights issues that China has (or lack thereof more specifically). They should never h
      • by dunkelfalke ( 91624 ) on Tuesday January 25, 2005 @07:40AM (#11466440)
        well, usa has been the only country getting mad at others and invade in the last years.
        • What a hoot!

          Try selling that line of cow huey to the Nepalese,
          the Tibetans, or the Taiwanese (, or before that,
          to the Vietnamese, or before that to the Indians).

          Today's PRC does maintain a low profile when it
          comes to international aggression, if only to
          placate and numb people like you. The Maoist
          "insurrection" in Nepal has been attributed to
          "home-grown rebels" in most of the press, because
          the interests of the multi-national corporations
          are at risk. The PRC does make use of proxies
          in their international
        • Mothers of 5 year olds know the correct answer to this: "you ignore the civil rights abuses of those other countries and work on your own".

          It really irritates me when people try to pretend like the Chinese, Libyans, Syrians, etc are suddenly beyond reproach because the US has committed some actions like theirs.

          So yes, the US has human rights violations and yes, the US has invaded a sovereign nation for a lie. But that does not remove the stain of such actions on any other nation that has committed them.

        • If the Chinese are such great people and trustworthy business partners, then why would they steal a W88 []?

          The Chinese are large, powerful, and Machiavellian. China has no qualms in pushing us to the brink of war [] if it suits their desires.

          I expect my government to be extremely cautious in dealing with China. They are the most dangerous situation we face today - our Arabic problems are a sideshow by comparison.

      • Human Rights record?? Can you say "guantanamo bay"?

        I didn't think so.

        Of course, at least the people held in guantanamo bay - against their will and without any legal proof of wrongdoing - are still alive. Unlike the (conservative, peer-reviewed estimate of) 100,000 dead people caused directly by the invasion of iraq - the vast majority of whom had done nothing wrong.

        You Americans and your blatant hypocrisy make me want to puke.

        The biggest menace in the world at the moment is not just red; it's red, whit
        • *cough*

          Speaking as an American... Many of us hold the same opinion as the rest of the world. We don't all approve of the war in Iraq. We don't all approve of Bush. Hell, a lot of us are absolutely disgusted with what's going on. Unfortunately, it's not like we can do much. Protest? Those don't do much. Rebellion? Yeah, that'll work... We're not all hypocritical; just some of us.

        • Comparing something like Guantanamo Bay, where foreign non-soldiers (for lack of a better term) are held, with China, where the government wields absolute, arbitrary power over every citizen, is simply wrong. The biggest menace in the world at the moment is red and dwells in the East. It already invaded and swallowed Tibet, fought several border wars with India and continues to threaten Taiwan. Contrast that with the U.S., which did invade Iraq (an act I'm not going to justify because it was probably a mist
      • by Anonymous Coward
        Grrrrr, I really hope you're trolling but I'll bite.

        The moderators must be smoking crack - insightful indeed? Closer to the mark is insanly paranoid and raving mad about a insubstantial red menace... Oh, your from the USA, I guess that's been drilled into you from birth so you can be excused a little. Fortunatley many Americans are able to draw their own conclusions rather than spouting the nonesense they've been force fed - take a look some of them post on slashdot.

        When the USA instigates illegal fore
  • So it begins (Score:4, Insightful)

    by scapermoya ( 769847 ) * on Tuesday January 25, 2005 @07:06AM (#11466329) Homepage
    The last-ditch efforts of a superpower that will hate being #2 when when China gets its act together in the next generation or two.
    • Probably one of the best things that could happen, though. Maybe then people will realize that resting on your laurels is always a bad idea in the long run.
    • #2? (Score:5, Interesting)

      by Savage-Rabbit ( 308260 ) on Tuesday January 25, 2005 @08:17AM (#11466640)
      Hardly #2, but the USA is nevertheless waking up to the fact that China is catching up technologically at a much faster rate than anybody had expected. Soon enough the Chinese will have reached a point where they can threaten the USA militarily using Chinese developed technology based on technological transfer from Russia, W-Europe and the USA it self. Greedy corporations outourced work to China and with they exported the technology China needed to develop better and better military hardware. This sort of a panic reaction is simply a belated reckonition of this development. Expect the Chinese to field Submarines, Tanks and a Stealth aircraft capable of competing with the F-35 within the next 20 years or so and its surface fleet will become a serious challenge to the USN in the Pacific.
      • Re:#2? (Score:2, Informative)

        by scapermoya ( 769847 ) *
        China isn't gunning for our spot as the military superpower, they are gunning for our spot as the economic one. They have 1.3 billion people, with the right organization their GNP will outstrip that of the US in the next 50-75 years, easily.
    • by emil ( 695 )

      Two societies - one governed by The Little Red Book [], the other by the Declaration of Independence [].

      Which one do you think will work?

  • Laissez-Faire? (Score:5, Insightful)

    by JulianOolian ( 683769 ) on Tuesday January 25, 2005 @07:12AM (#11466341)

    I thought the US were supposed to be the laissez-faire free marketeers of the world?

    If China was blocking US participation in their markets on these grounds, I've little doubt the US would be taking the matter to the WTO (and winning).

    • Re:Laissez-Faire? (Score:4, Insightful)

      by antifoidulus ( 807088 ) on Tuesday January 25, 2005 @07:16AM (#11466354) Homepage Journal
      China does this type of stuff to US products in China all the time. They have a ton of "non-tarriff" barriers. The reason the US has yet to make a major challenge to them in the WTO is that:
      a. They are good at buying politicians(*Cough* Clinton *cough*) and
      b. They are a major(if not the foremost) consumer of American debt. Dubya can't run his tax cut and spend government without them, so the US doesn't really make any challenges to them in the WTO.
      • China does this type of stuff to US products in China all the time.

        This is not about China blocking sales of US products into China, but about the US blocking sales of a US product (in this case a brand, intangable, but still a product) to China.

        Ie it is a case of the US government putting up a non-tarrif barrier against US exports.

        You missed a reason for the US not taking China to the WTO -- the US is one of the two top offenders against WTO rules in spirit and in letter, and so from it's glass house

  • by antifoidulus ( 807088 ) on Tuesday January 25, 2005 @07:12AM (#11466342) Homepage Journal
    China can always threaten to stop buying up US debt. That would mean a large spike in interest rates in order to make buying US debt more attractive to investors. It would probably also mean a tax hike, something that Dubya would like to avoid at all costs.
    Cheney may have said that deficits don't matter, but sooner or later, he will learn that giving the largest dictatorship on Earth a large voice in your government is a bad idea. (Esp. when you are supposed to be promoting "freedom" and "democracy")
    • It would probably also mean a tax hike, something that Dubya would like to avoid at all costs.

      Wouldn't it be something that the Chinese would like to avoid at all costs..a tax hike for the largest consumer market for their products will be like a tariff on their exports.

    • Well, if I were the head of China's government, I would do nothing, and let the market settle it. And I would keep buying US debt, until I own more than 50% of the US debt, and I would be able to do more remote control of the US government (or at least, influence it to my favor).

      Could this scenario happen? It could, if the government officials keep the country running like this for a while, and do not screw it with political unstability, and we would be able to see some new rules set by China. I'm not sayi
    • you do realize that China doesn't buy US debt because they are trying to be our friends or are somehow similar to western germany as america was coming off the gold standard??

      China buys american debt as one of its many ways of keeping its currency down(covert to dollar then buy our debt,note you can keep your real investment value about the same or with small growth from interest on debt you don't get when holding cash). It is in China's favor to continue to hold its currency down as they have been doing
      • Anyways, if these doomsday prediction of China gaining control over the US by owning enough of its debt ever came to pass, the US always has one major trump card, we can at any time invalidate all those US treasury bonds and they become nothing more than scraps of paper.

        Yes, but the US government could probably say goodbye to being able to borrow money for a long while. Do you think that anyone would trust their finanical promises after an action like that?

        • nope, not in the slightest, but I also don't believe that China will control our policy by holding our debt. just speaking as an american, if it came down to a choice between China having a major say in our policy and not being able to borrow money, I would take the latter in a heartbeat. but that is just me.
    • China can always threaten to stop buying up US debt. That would mean a large spike in interest rates in order to make buying US debt more attractive to investors.

      Sure, China could stop buying US debt. U.S. interest rates would rise and economic growth in the U.S. would slow. But this would threaten China's massive exports of rubber dog shit. Since the Chinese regime's goal is full employment, they won't do anything to threaten that. President Bush and Vice-President Cheney have been excellent stewards o

      • President Bush and Vice-President Cheney have been excellent stewards of the U.S. economy.

        Humungous trade-deficit, plummetting dollar, humungous budget-deficit... If that's "excellent", I'm afraid to know what would "terrible" be like...
    • Currency Speculation (Score:3, Interesting)

      by sjbe ( 173966 )
      China can always threaten to stop buying up US debt.

      And do you know what the effect of that would be on China? It's a complicated subject but one of the reasons China keeps such large currency reserves is so they can protect their currency against speculation. China has something around $500 billion in US currency right now. This large reserve helps them maintain their currency's peg to the dollar. Its more complicated than this, but essentially they are taking dollars out of circulation thus increas
  • Why IBM need to sell (Score:5, Informative)

    by Ev0lution ( 804501 ) on Tuesday January 25, 2005 @07:33AM (#11466407)
    Bad news for IBM if it's blocked, because if you look at the full year report* it's clear why they're so keen to get rid of it.

    Personal Systems Group made $162 million off turnover of nearly $13 billion, that's a 1.2% margin. Software group made $4.5 billion from a $15 billion turnover. Hell, WebSphere MQ Series made several times the profit of the whole PC business, and that's a team of maybe 200 people. CICS made even more. From IBM's point of view, Personal Systems Group isn't worth the effort or the risk.

    * 4q04earnings.phtml []

  • by g0hare ( 565322 ) on Tuesday January 25, 2005 @07:34AM (#11466411)
    Computers are all made in China anyway! We don't build cars in America, we don't grow food in America, we don't even do tech support in America, we don't make steel in America, we don't make clothes in America and we're busy moving all our jobs that pay well overseas! When exactly did this kind of behavior become a "national security problem?" instead of good business? I mean I know all those people who used to make textiles in the South all just went right out and got themselves a degree after the mills closed - what, you say they weren't smart enough to do that?

    Then WHAT THE HELL is left for them to do when all those jobs are gone except cook meth in their trailers? Or become religious terrorists?
  • This is like (Score:5, Interesting)

    by cyberkahn ( 398201 ) on Tuesday January 25, 2005 @07:36AM (#11466426) Homepage
    sticking your finger in the leaking dike or singling out a grain of sand from the beach. It's already too late. We have exported a majority of our technology to China already, which of course is being copied, therefore, saving China billions in R and D. America's greed has sold itself out.

    Before you flame me, yes, I am a patriotic American, however, I am not blind to what is happening. America is going down the path of Rome. Just give us more bread and circuses. Football is more important than academics. Money is more important than ethics.
  • Computers, at least at the PC level, are a commodity good that are produced with very narrow cost to sales price margins. This makes them very similar to toasters, coffemakers, small refrigerators, etc. IBM wants to sell its PC unit because it can no longer compete or doesn't want to continue expending the energy and resources it takes to compete. This competition arises from the fact that there are any number of other producers in the market turning out computers which are almost indistiguishable from t
  • by shanen ( 462549 ) on Tuesday January 25, 2005 @07:44AM (#11466450) Homepage Journal
    [One of the key figures is already missing...]

    George B.: Condi! Nice to see you. What's happening?
    Condie R.: Sir, I have the report here about the new leader of China.
    George B.: Great. Lay it on me.
    Condie R.: Hu is the new leader of China.
    George B.: That's what I want to know.
    Condie R.: That's what I'm telling you.
    George B.: That's what I'm asking you. Who is the new leader of China?
    Condie R.: Yes.
    George B.: I mean the fellow's name.
    Condie R.: Hu.
    George B.: The guy in China.
    Condie R.: Hu.
    George B.: The new leader of China.
    Condie R.: Hu.
    George B.: The Chinaman!
    Condie R.: Hu is leading China.
    George B.: Now whaddya' asking me for?
    Condie R.: I'm not asking you, I'm telling you. Hu is leading China.
    George B.: Well, I'm asking you. Who is leading China?
    Condie R.: That's the man's name.
    George B.: That's who's name?
    Condie R.: Yes.
    George B.: Will you or will you not tell me the name of the new leader of China?
    Condie R.: Yes, sir.
    George B.: Yassir? Yassir Arafat is in China? I thought he was in the Middle East.
    Condie R.: That's right.
    George B.: But Yassir's a leftie. Then who is in China?
    Condie R.: Yes, sir.
    George B.: Yassir is in China?
    Condie R.: No, sir.
    George B.: Then who is?
    Condie R.: Yes, sir.
    George B.: Yassir?
    Condie R.: No, sir.
    George B.: Look, Condi. I need to know the name of the new leader of China. Get me the Secretary General of the U.N. on the phone.
    Condie R.: Kofi?
    George B.: No, thanks.
    Condie R.: You want Kofi?
    George B.: No.
    Condie R.: You don't want Kofi.
    George B.: No. But now that you mention it, I could use a glass of milk. And then get me the U.N.
    Condie R.: Yes, sir.
    George B.: Not Yassir! The guy at the U.N.
    Condie R.: Kofi?
    George B.: Milk! Will you please make the call?
    Condie R.: And call who?
    George B.: Who is the guy at the U.N?
    Condie R.: Hu is the guy in China.
    George B.: Will you stay out of China?!
    Condie R.: Yes, sir.
    George B.: And stay out of the Middle East! Just get me the guy at the U.N.
    Condie R.: Kofi.
    George B.: All right! With cream and two sugars. Now get on the phone.
    Condie R. (into phone): Rice, here.
    George B.: Rice? Good idea. And a couple of egg rolls, too. Maybe we should send some to the guy in China. And the Middle East.

    [With apologies to Abbott and Costello--"Who's on First?"]
  • Totally (Score:5, Funny)

    by t_allardyce ( 48447 ) on Tuesday January 25, 2005 @07:49AM (#11466467) Journal
    Frankly im outraged, I think everyone here needs to write to their congressman or something. Also I have absolutely no idea what the story is about, thats the most confusing paragraph ive ever read. IBM PC's are national secuirty risks? Blocking sales? Something about communist China? I wish the government was this concerned with oil company ownership.
  • by andy1307 ( 656570 ) on Tuesday January 25, 2005 @07:51AM (#11466474)
    They are concerned Lenovo employees might be used to conduct industrial espionage.

    Are they worried about Lenovo employees(presumably Chinese) spying on the companies they sell laptops too? for e.g., if a laptop from a defense contractor is sent to a Lenovo facility for servicing, are they afraid the Lenovo employees might get some information they shouldn't be getting? Aren't IBM laptops serviced by third parties anyway? Where exactly is the potential for industrial espionage?

  • That the neocons are big fans of the free market.
  • by 2Bits ( 167227 ) on Tuesday January 25, 2005 @07:57AM (#11466488)
    I mean, all these smart people in all those 11 agencies, and still couldn't come up with a decent reason to block the deal?

    If I were to do industrial espionage, why would I buy a PC unit? There's not much research in that. I'd go for the chip unit, the mainframe unit, or something. PC unit for espionage? Give me a fucking break. It's just assembly line, mostly, for whatever sake!
  • by ka9dgx ( 72702 ) on Tuesday January 25, 2005 @08:57AM (#11466953) Homepage Journal
    We get all picky about who owns the undersea cables, but don't give a shit about who controls the systems that allow remote unaudited phone taps []... typical, just fucking typical.

    There was a company that made rare-earth magnets in Valparaiso, Indiana. [] (Necessary for small strong servos in, oh... missles...) That got sold to China...

    inconsistent, arbitrary law enforcement breeds contempt.

    If we had a compentent National Security Council, none of this would have happened, nor would it have been allowed to be politicized.


  • Wonder if this is the same slashdot crowd that

    A) Talks about China censorship in relation to Google
    B) Doesn't think that the government may have another reason besides the obvious clap-trap for blocking the sale

    With everything going on in the news, does anyone believe they would block the sale of IBM over something as trivial as industrial espionage? Many of you have pointed out the plethora of other companies that are based overseas, but yet fail to see that something else maybe behind the "rumored" bl

  • by walterbyrd ( 182728 ) on Tuesday January 25, 2005 @09:34AM (#11467253)

    The move by IBM to somewhat re-invent the PC, starting in China, is msft's worst nightmare. A move like that could eventually make linux a serious contender against windows. Let's face it, right now linux has about 2% of the desktop market, and is largly ignored by major software developers like intuit, adobee, and autodesk.

    Msft is certainly not above abusing the USA legal, or political system, in order to maintain msft's market position.

  • The CFIUS is a joke. Although Hutchinson Whampoa never acquired GC, Singapore Technologies Telemedia (ST Telemedia) [another foreign company] did... Richard Perle [] was hired by the GC board to lobby the transaction with the Bush administration.
    Bush approved the sale of the one of the largest U.S. fiberoptics network to a foreign entity in the middle of a war.
  • We are talking about generic PC's with Intel chips running Windows.

    In this day of Blue-Ray DVD's G5 chips, and the return of *nix this is like stopping the sale of VCR's or 8 track tape players

    National Security?, how about stopping flat head engine technology from going to China?

  • This Bloomberg article [] has a little more substance than the Xinhua version. There's a little more in there on the espionage aspects that Xinhua left out.

  • that Bill Gates complaints about OSS people being "communists" may have been related to IBM's sale of the PC Division to Lenovo as an end-run around Microsoft to penetrate the Chinese PC market - which is obviously potentially far larger than the US market.

    Not to mention that the Chinese are likely to be running Linux rather than Windows...

    And we all know how Gates has the ear of the Bush Administration...

    Business as usual in the US of A...

    If you can't compete, bring in the cops...
  • CFIUS say "No".
  • by poot_rootbeer ( 188613 ) on Tuesday January 25, 2005 @01:31PM (#11470184)
    IBM PC unit?

    Frankly, I don't see how a 25-year-old 8088-based computer would present much of a threat of industrial espionage.

    Well, if they added the second 5 1/4" drive and 110 baud acoustic-coupler modem, maybe.

The other line moves faster.