Connect with us

Hi, what are you looking for?


Network Security

China’s Lenovo to Buy IBM’s Low-end Server Business for $2.3 Billion

HONG KONG – Chinese computer giant Lenovo will buy IBM’s low-end server business for $2.3 billion, it said Thursday, giving it a platform to compete in that sector with US giants Dell and Hewlett-Packard.

HONG KONG – Chinese computer giant Lenovo will buy IBM’s low-end server business for $2.3 billion, it said Thursday, giving it a platform to compete in that sector with US giants Dell and Hewlett-Packard.

IBM will receive $2.07 billion in cash and the rest in shares for the x86 business, Lenovo said, in a deal that would help the Chinese firm diversify away from the slumping market for PCs.

IBM will still provide maintenance on behalf of Lenovo, while some 7,500 members of staff worldwide will be offered employment by the Chinese company, according to a statement from the American technology giant.

The deal, announced in a statement to the Hong Kong Stock Exchange, comes after Lenovo bought the US firm’s PC business for $1.75 billion in 2005, in a landmark deal that showcased Chinese companies’ efforts to expand overseas.

It will also allow Lenovo to compete in the server segment with US rivals Dell and Hewlett-Packard.

Thursday’s announcement comes after Lenovo and IBM resumed talks on a buy-out of the US firm’s low-end server business that had broken down last year over differences in price.

Ricky Lai, a Hong Kong-based analyst at brokerage firm Guotai Junan International Holdings, said the deal would boost Lenovo’s competitiveness in the enterprise server market where the Chinese company is still a minor player.

Advertisement. Scroll to continue reading.

“The acquisition will (have a) positive impact on Lenovo. The company can diversify its business segment, revenue (sources) can be diversified,” he told AFP.

Lenovo, which according to surveys has become the largest vendor of PCs, is keen to diversify its business at a time when consumers are increasingly turning to portable computing technology.

Sales of personal computers fell 10 percent in the Asia Pacific last year due to sluggish economic growth and stiff competition from smartphones and tablets, the International Data Corporation said this week.

IDC said sales of PCs fell to 108 million units in the Asia Pacific outside Japan, marking the region’s first annual double digit decline.

“This acquisition demonstrates our willingness to invest in businesses that can help fuel profitable growth and extend our PC Plus strategy,” Lenovo CEO and chairman Yang Yuanqing said in a statement.

IBM, meanwhile, said the money generated from the sale of their low-end server business could be put towards research and development of new products.

“This divestiture allows IBM to focus on system and software innovations that bring new kinds of value to strategic areas of our business, such as cognitive computing, Big Data and cloud,” said Steve Mills, an IBM vice president.

The deal, however, could face hurdles before it is completed as US regulators are likely to closely scrutinize any acquisition of local companies by Chinese firms owing to national security concerns.

When Lenovo bought IBM’s PC business in 2005, the $1.25 billion deal came under scrutiny by the US Congress and the US Committee on Foreign Investment, before it was approved.

“There may be national security risks, depending on where and how the servers are used,” Jonathan Gafni told Dow Jones Newswires.

Gafni, president of consultancy Compass Point Analytics, was formerly associated with the US government committee that reviews foreign acquisitions on national security grounds.

Bids by Chinese companies to expand in the technology sector in the United States have faced hurdles in the past.

In 2012, a congressional committee said Chinese telecom firms Huawei and ZTE should be excluded from government contracts because their equipment could be used to spy.

The US, in the same year, also barred Chinese engineering giant Sany from a multi-million-dollar wind farm project in Oregon on national security concerns.

Written By

Click to comment

Daily Briefing Newsletter

Subscribe to the SecurityWeek Email Briefing to stay informed on the latest threats, trends, and technology, along with insightful columns from industry experts.

SecurityWeek’s Threat Detection and Incident Response Summit brings together security practitioners from around the world to share war stories on breaches, APT attacks and threat intelligence.


Securityweek’s CISO Forum will address issues and challenges that are top of mind for today’s security leaders and what the future looks like as chief defenders of the enterprise.


Expert Insights

Related Content

Identity & Access

Zero trust is not a replacement for identity and access management (IAM), but is the extension of IAM principles from people to everyone and...

Cybersecurity Funding

Network security provider Corsa Security last week announced that it has raised $10 million from Roadmap Capital. To date, the company has raised $50...

Identity & Access

Hackers rarely hack in anymore. They log in using stolen, weak, default, or otherwise compromised credentials. That’s why it’s so critical to break the...

Network Security

Attack surface management is nothing short of a complete methodology for providing effective cybersecurity. It doesn’t seek to protect everything, but concentrates on areas...

Network Security

NSA publishes guidance to help system administrators identify and mitigate cyber risks associated with transitioning to IPv6.


Websites of German airports, administration bodies and banks were hit by DDoS attacks attributed to Russian hacker group Killnet

Application Security

Fortinet on Monday issued an emergency patch to cover a severe vulnerability in its FortiOS SSL-VPN product, warning that hackers have already exploited the...

Network Security

Our networks have become atomized which, for starters, means they’re highly dispersed. Not just in terms of the infrastructure – legacy, on-premises, hybrid, multi-cloud,...