The proposed IBM-Lenovo deal might start a new era of Sino-American economic cooperation. But the growing US security concern may imperil the proposed deal and put both companies at serious disadvantages.

The strategic sale of IBM's PC business to Chinese PC giant, Lenovo, has raised concerns in US regarding its national security. The three senior Republican CongressmenDuncan Hunter of California, Henry Hyde and Don Manzullo from Illinois, are lobbying against the proposed $1.75 bn deal. They are campaigning against the deal on the ground that it hurts America's security interest. The deal includes not only the transfer of advanced US technology to China, but also allows Chinese armed forces to use IBM's facility for espionage activities. This deal has not only created problems for the US government, but also for the company itself. The US Treasury ledCommittee on Foreign Investment in the US (CFIUS), which considers security risks of foreign firms buying or investing in American companies, is investigating the national security aspects of this deal. The deal has to be finally approved by the US President. A government move against the proposed deal can block it. US' decision to prolong a review of the deal is casting doubts about the future of the deal.

Lenovo acquired IBM's PC division in December, 2004. As per the agreement, IBM holds an 18.9% stake in Lenovo. The acquisition will enhance Lenovo's stature in the global PC market. Consequently, its rank among the largest PC makers will jump up from the ninth position to the third, only behind Dell and HP. However, the proposed deal was a strategic and deliberate move by IBM to prune its struggling PC division.

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