UPDATED 07:15 EDT / AUGUST 18 2014

IBM’s X86 server sale to Lenovo gets a green light

small__9099737213The sale of IBM Corp’s low-end server division to China’s Lenovo Group Ltd., has finally been granted the go-ahead by US regulators. The Committee on Foreign Investment (CFIUS) has given the thumbs up to the acquisition, which will see Lenovo take IBM’s X86 server business unit off its hands in a $2.3 billion deal.

“Lenovo can confirm reports that CFIUS has cleared its transaction to acquire IBM’s x86 server business and the companies have completed the regulatory process in the United States,” said a Lenovo spokesperson last Friday.

The news was reiterated by IBM later the same day in its own brief but breathless press release:

“The approval of the $2.3 billion sale to Lenovo enables IBM to focus on system and software innovations that bring new kinds of value to IBM clients in areas such as cognitive computing, Big Data and cloud, and provides clarity and confidence to current x86 customers that they will have a strong partner going forward,” Big Blue stated.

The CFIUS, which is tasked with assessing whether the sale of US businesses to foreign companies could have national security implications, had been evaluating the deal for several months. Last June, it was reported that the review process had been setback due to concerns that Lenovo might allow China’s spies ‘back door access’ to its servers. Aside from this, officials were reportedly concerned the deal would allow China to get its hands on IBM’s clustering technology, would could give it a boost in high-performance computing. Given that China already possesses the world’s most powerful supercomputer those concerns are probably unfounded, but that didn’t stop regulators raising similar concerns back in 2005 when Lenovo acquired IBM’s PC business.

The PC division sale was ultimately approved, but that didn’t stop the paranoid US State Department from banning Lenovo’s PCs from being used on secure government networks. It remains to be seen if the same ban will now be extended to Lenovo X86 servers, but if Hewlett Packard company’s claims that it’s already stolen “hundreds” of customers from Lenovo are true, it could be a sign of things to come.

But in most cases, IBM’s current x86 customers shouldn’t be too worried about the deal. Last June, Wikibon Principal Research Contributor Stuart Miniman wrote in a professional alert that users “are in the driver’s seat” as IBM and Lenovo have a track record of providing solid transitions, as evidenced by IBM’s sale of its PC business to Lenovo in 2004.

China’s Ministry of Commerce announced it had given a green light to the X86 deal back in July, which meant CFIUS approval was the last major obstacle to pass before the deal can be completed.

photo credit: Kat Northern Lights Man via photopin cc

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