China cyberespionage charges: more chilling effects

A story from China Daily details Lenovo’s worries that the Committee on Foreign Investment in the US is going to block its proposed $2.3 billion buyout of IBM’s x86 server unit. This is driven by the recent frostiness in the US-China relationship resulting from the US indictments of the five PLA hackers.

Senior vice-president Chen Xudong believes “worsening Sino-US cybersecurity trust issues may derail the deal with IBM,” according to China Daily.

“It is not inconceivable that someone could use (national security concerns) to make a fuss about the deal,” Chen said.

As Mike Wheatley at US-based SiliconANGLE writes “extra-close scrutiny of this deal was always on the cards.”

“That’s because several US government agencies, including the FBI and the Department of Defense, use IBM’s x86 servers. Telecommunications firms like AT&T and Verizon are also big customers, reports Bloomberg.”

The kind of distrust stemming from the hacking issue may indeed prevent this kind of deal going through. Over time tech businesses won’t expect to be to sell their businesses so easily to China. So over time a natural barrier emerges. At the same time, more effective defense of US commercial trade data, though better corporate-government coordination, will begin to alter the playing field with China. Clearly, China is off and running with its own technology – but if the global industry is essentially split into, expect an element of national competition to creep into the business.

For historical perspective, recall that Lenovo itself is the home of what used to be IBM’s laptop business.

How to create a new market for laptops

Remind the public that people in sensitive work don’t trust the fundamental security of a brand of computers.

That’s what this article on spy agencies not using China-made Lenovo computers does.

From the Australian Financial Review

The ban was introduced in the mid-2000s after intensive laboratory testing of its equipment allegedly documented “back-door” hardware and “firmware” vulnerabilities in Lenovo chips. A Department of Defence spokesman confirmed Lenovo ­products have never been accredited for Australia’s secret or top secret ­networks.

The classified ban highlights concerns about security threats posed by “malicious circuits” and insecure firmware in chips produced in China by companies with close government ties. Firmware is the interface be­tween a computer’s hardware and its operating system.

And while spy agencies are in the upper end of the sensitive work, in a knowledge economy, most knowledge that is not broadcast has some level of sensitivity, whether they are corporate spending plans, sales contacts lists, leads, schematics, blueprints, code, strategy, etc, etc.