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US aborts sale of Lenovo systems, Lenovo said it's being discriminated against

DailyTech previously reported that the US government was under some fire from within for considering to purchase computers manufactured by Chinese-owned Lenovo. The reason came about because Lenovo is a Chinese company, and although it is not entirely state-owned, its ties with the Chinese government have not been met well with some members of government.  Lenovo's parent company, Legend Holdings, has a 60% stake in the company.  The Chinese Academy of Sciences has a 65% stake in Legend Holdings. Members of congress complained that using computers manufactured in China would pose a threat to the US's national security.

Today, it appears that the US government has decided to drop its plan to spend roughly $1.3M USD on Lenovo PCs sold via CDW Government. The deal was one of Lenovo's larger deals and although it had complied with inquiries and talks, increasing outcry from within the US government ended up nixing the deal.  As we had mentioned earlier on DailyTech, even the accusation of espionage is typically enough to warrant the halt of such deals.

An investigation was launched earlier this year to look into Lenovo's manufacturing routines and to check if the company had met all international standard policies and requirements, especially those pertinent to the US.  Lenovo representatives claimed that it would not violate any international laws or policies with computers that it manufactures. More recently, Lenovo's chairman lashed out and told reporters that Lenovo was being discriminated due to association.

Lenovo has not released a public statement.


Update 06/15/2006: We incorrectly published that Legend Holdings has a 60% stake in Lenovo.  Legend in fact has a 42% stake in Lenovo. 

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wow
By brshoemak on 6/14/2006 8:24:06 AM , Rating: 5
**NEWS FLASH**

"The US government has announced that it will not be purchasing Lenovo computers from China as originally planned so they can focus on quality US brand PC's like Dell (which are built by and large in China). To quell rumors of discrimination towards China for this move, a buffet of egg rolls and won tons will be served to the technicians installing the PC's at various government locations."






RE: wow
By The Cheeba on 6/14/2006 8:28:11 AM , Rating: 2
lol you just made my morning.


RE: wow
By Trisped on 6/14/2006 1:12:02 PM , Rating: 2
Ditto, the futility of this is amazing. Aren't most chips made in China, then shipped to Taiwan to be put into boards before being shipped somewhere else and put together to make computers for the cheep Americans that want power, but don't want to pay their fellow Americans to build it for them?


RE: wow
By creathir on 6/14/06, Rating: 0
RE: wow
By fungry on 6/14/2006 10:39:25 AM , Rating: 2
here dude, what is the difference between malaysia and china concerning security? A malaysian associate can ALSO plug in a monitoring system of some sort into the laptop. In addition, just because a company is an American owned doesn't mean it is made and assembled in America. -_-... make your point clear because anything can go wrong no matter what person, what city, what country and what continent. Its simply the US government taking precautions.


RE: wow
By shadowzz on 6/14/2006 10:46:26 AM , Rating: 3
If someone is going to put a spy device in a notebook its going to be an IC on a motherboard not a trojan in the OS. Think about that.


RE: wow
By creathir on 6/14/06, Rating: 0
RE: wow
By masher2 (blog) on 6/14/2006 4:39:23 PM , Rating: 4
> "*cough* Software needs to run that IC "

Not true at all. A custom ASIC wouldn't require any software. For espionage purposes, a hardware-only solution is vastly preferable.



RE: wow
By masher2 (blog) on 6/14/2006 11:39:19 AM , Rating: 2
> "what is the difference between malaysia and china concerning security?"

Visit both nations and you won't have to ask that question. The difference is quite clear.


RE: wow
By techG33K on 6/14/2006 2:56:51 PM , Rating: 2
This is totally wrong. Something in that article from China got lost in translation b/c the State Dept. went ahead with the purchase, they just re-purposed the systems for unclassified networks.

http://www.washingtonpost.com/wp-dyn/content/artic...

Every PC, American-branded or not, is manufactured in China, and has been for years. Lenovo has so far been a success story and model for capitalism in China, and now wants to build a worldwide PC business. There's too much at stake. Imagine what would happen if even one case of spying came to light.


RE: wow
By creathir on 6/14/2006 3:19:55 PM , Rating: 3
Something got lost in facts there...
Every PC is NOT manufactured in China...
Not sure where you get your information, but it totally inaccurate.
- Creathir


RE: wow
By creathir on 6/14/2006 3:20:11 PM , Rating: 3
Something got lost in facts there...
Every PC is NOT manufactured in China...
Not sure where you get your information, but it is totally inaccurate.
- Creathir


RE: wow
By ElFenix on 6/15/2006 12:06:45 AM , Rating: 2
yeah, 0 interest government loans that don't need to be repaid sure are capitalism!


It's a sad day
By GreenEnvt on 6/14/2006 8:25:10 AM , Rating: 1
The US government has given in to some crazy paranoia once again. The idea that Lenovo could some how be spying on the US via it's laptops is absurd.

Maybe the US should go confiscate all the kids care bears, gi-joe's and other toys made in China, they also might be "spying" on the US.




RE: It's a sad day
By edogwv on 6/14/2006 8:45:51 AM , Rating: 2
I agree, sometimes what you dont understand can be scary...

I have a relative that's over 80, is scared to use the internet because he's worried his identiy may be stolen. Also, has never gotten a credit card for the same reasons...

But, he's probably from the same generation that some of these Senators who are calling the shots about Lenovo ... They grew up with "Buy American" ... the world is a much different place now -


RE: It's a sad day
By masher2 (blog) on 6/14/2006 9:09:10 AM , Rating: 2
Are you really so naive to believe custom-designed asics in a laptop couldn't be a serious security risk? Offhand, I can think of half a dozen ways this could be implemented.

Lenovo isn't just "a Chinese company". It is majority owned and controlled by the Chinese state government. A government that has been heavily engaging in US-based espionage activities in the past decade. Incontrovertible fact.

Whether or not you believe in the security risk, there is another angle. Buying Chinese goods may be indirectly supporting an oppressive, tyranical regime...but buying Lenovo laptops is directly supporting one.


RE: It's a sad day
By PT2006 on 6/14/2006 9:13:19 AM , Rating: 2
Actually, its own 39% by a school in China, if we are to believe the article anyway.


RE: It's a sad day
By masher2 (blog) on 6/14/2006 9:43:35 AM , Rating: 2
Actually, Lenovo is 46% owned by Legend Holdings, and 35% publicly owned...of which at least 10% is held by Chinese equity firms for which we can't determine State ownership or control.

Now, who owns Legend Holdings? It is 65% owned by the Chinese Academy of Sciences, an arm of the Chinese Government. The remaining 35% is held by a profit sharing arrangement with the employees of Legend itself. Furthermore, Legend didn't just "buy into" Lenovo. It founded it and provided the bulk of its startup capital.

Is the Chinese Government interested in spying on US government computers? The US DoD logged 75,000 Chinese-based hacker attacks on its classified networks in 2004 alone. Are those all occurring without government knowledge or assistance? I seriously doubt it.


RE: It's a sad day
By shadowzz on 6/14/2006 9:50:43 AM , Rating: 3
How many "attacks" did .Gov.CN log from the US?

By the way, a ping scan doesn't count as an attack to me.


RE: It's a sad day
By masher2 (blog) on 6/14/2006 10:12:47 AM , Rating: 2
> "How many "attacks" did .Gov.CN log from the US? "

So your logic is, if the US itself gathers intelligence, we should just open up and and all our secrets to foreign powers? You might want to rethink that.

A responsible nation not only gathers intelligence, it also takes steps to protect its own assets from being compromised. Nations which fail to do this don't tend to last long.

> "By the way, a ping scan doesn't count as an attack to me. "

Attacks, not ping scans. According to Federal Computer Weekly, over the past five years, "several thousand" such attacks have not only occurred, but been at least semi-succesful penetrations.


RE: It's a sad day
By shadowzz on 6/14/2006 10:49:58 AM , Rating: 2
quote:
So your logic is, if the US itself gathers intelligence, we should just open up and and all our secrets to foreign powers? You might want to rethink that.


No, my logic is I can pull any random server off the internet and log 70k attacks from just about anywhere.

And I am all for banning these computers, by the way. I just think the MOTHERBOARDS need to be looked at. So far as I know, every motherboard is made in China -- not taiwan but mainland china. You tell me what is the point of banning Lenovo when all the Chinese government is going to do is walk into a SOE or co-op factory in Shanghai and just start soldering ICs onto motherboards that phone home every once in a while.

I am more concerned with that than all this other BS, but I don't see congressmen waving the flag at all of those manufacturers.


RE: It's a sad day
By fsardis on 6/14/2006 11:16:38 AM , Rating: 3
how many times have you actually been outside the USA? or to make it even better, have you lived for a long period of time outside the USA?
just cause your government tells you China is attacking doesnt mean its true. hell, they told you Iraq had WMD. still looking for it while the rest of the world is laughing at you.
so when you say china is attacking and thats an incontroversible fact you only appear stupid to the eyes of everyone outside the america cause such things are not even mentioned in the last pages of newspapers here. if they were true, other countries would know and the press would also inform the people. surprisingly its only americans that are being told they are under constant threat.
seems to me "terror" is the best ally for your government. Problem is, it now coming back to bite you since no american has any respect anymore in most countries in the world.


RE: It's a sad day
By masher2 (blog) on 6/14/2006 11:54:06 AM , Rating: 3
> "how many times have you actually been outside the USA? or to make it even better, have you lived for a long period of time outside the USA? ...just cause your government tells you China is attacking doesnt mean its true...

Well, I went to graduate school outside the US, worked in a third foreign nation after that...and I've visited China, Hong Kong, and Taiwan on numerous occasions.

More importantly, I read media and analyst accounts not only from the US, but all over the world. Anyone who seriously doubts China is modernizing and expanding its military force at an alarming pace-- at a period of history in which every other first-world nation is static or downsizing-- is simply fooling themselves. Furthermore, China is most assuredly preparing for at the eventuality of armed conflict with the US...over Taiwan, if nothing else.

These facts are incontrovertible. So is the fact of numerous Chinese agents thwarted and/or arrested for espionage on US soil in the past decade. As well as the extensive research and development China has engaged in on computer- and network-based warfare.

So when the US government-- as well as numerous retired military and government officials-- all agree there is a vast amount of hacker-based attacks on sensitive government networks originating from China, I tend to believe them.

What's your rationale for your beliefs? Innate trust in human nature? Or is it wishful thinking that the possibility of conflict and war have magically vanished from our future?


RE: It's a sad day
By fungry on 6/14/2006 10:42:55 AM , Rating: 2
hahaha a ping scan = hacking... if someone ever told me that, i would just crack up.



RE: It's a sad day
By TheDoc9 on 6/14/2006 11:22:24 AM , Rating: 2
exactly.


Oh really?
By kextyn on 6/14/2006 8:51:59 AM , Rating: 2
*Turns his government bought IBM T43 over and reads "Assembled in the US of US and non-US parts"*

This laptop is a month old, so when did they start assembling them in China? Every time I call tech support I get an AMERICAN in AMERICA. When I send in parts for repair they stay in AMERICA. So umm...where's the problem?

Or does this only apply to the Lenovo products without the IBM name? I'm not happy about our change to HP laptops later this year either. It has been great working with these IBMs. They really make my job as a technician easy. We have hundreds of IBM's and now we're going to have to start supporting these HP's.




RE: Oh really?
By shadowzz on 6/14/2006 8:59:52 AM , Rating: 2
RE: Oh really?
By kextyn on 6/14/2006 9:23:38 AM , Rating: 2
I don't get what you're trying to say. Are you implying that this laptop was not assembled in the US? Or are you just saying the components are manufactured in China?


RE: Oh really?
By shadowzz on 6/14/2006 9:24:59 AM , Rating: 2
The components are all made in China, so what's going to stop someone from slapping on an ASIC as mentioned above? It's not just Lenovo, its every company.


RE: Oh really?
By masher2 (blog) on 6/14/2006 10:30:28 AM , Rating: 2
> "so what's going to stop someone from slapping on an ASIC as mentioned above? "

Are you truly so naive? It's not the point of assembly that's the issue, its the control of those responsible for assembling it. A Dell assembled in China is still assembled by Dell. There is executive oversight...and more importantly, control over the design of the machine itself, and control over the sales (and thus the end-user location) of any modified units.

Modifying a fixed design to enable a security backdoor is much harder than stealthily building it into the design. Possible, surely...but even if a Chinese agent managed to do this without alerting Dell, how could they ensure those modified machines would wind up at the State Department? The only way possible would be to modify not just a few laptops, but most or all of an entire manufacturing run. That means a random examination is far more likely to reveal it....a fact complicated by the "tacked on" nature of the compromised design.

Now contrast this with a device designed and built for the purpose. A tiny change to the keyboard ASIC to enable keystroke logging...another change to the Wifi controller to enable it to spit out that data in response to a specially crafted packet. Both chips quietly sourced from Chinese-run semi firms...no need to subvert a Taiwanese company as well. And both disabled on all but a few units you know are being shipped to sensitive US government sites....and even those time-disabled until some future data. And these modified units wholly indistuishable from a normal laptop...except by total destructive analysis of each and every chip in the device.

These reasons are just the tip of the iceberg. Suffice it to say that a machine designed, specified, assembled, sold, and shipped by a unit of the Chinese government is substantially more risky than your average Dell laptop. I would think that would be obvious.


RE: Oh really?
By kextyn on 6/14/2006 10:39:55 AM , Rating: 2
There's one problem with all that. Laptops are rarely used as classified machines in the US Military.

Of course you could probably get plenty of secrets from people that ignore the rules about sensitive information.


RE: Oh really?
By fsardis on 6/14/2006 11:38:00 AM , Rating: 1
how this post is real quality.
ok no arguments that they can tinker with hardware and plant stuff in there. no arguments they can arrange for the said hardware to be sent to the government. but seriously doesnt the government have firewalls either hardware or software that will block unwanted communication?
and the wifi argument is one of the best ever. i work for a small firm and we strictly forbid employees to go wireless on laptops with financial info and you are telling me here that a laptop with sensitive info will be wifi enabled in public...


RE: Oh really?
By masher2 (blog) on 6/14/2006 12:01:16 PM , Rating: 2
> "you are telling me here that a laptop with sensitive info will be wifi enabled in public... "

Try to comprehend this. You get a new laptop and "disable" the Wifi card. It's still powered-up however. It still is active in the electronic sense. And no amount of scanning you do can determine whether or not that card is still able to passive receive signals or not, and act upon them. You could detect a packet transmission sure...but if that only occurs in response to specially-formed incoming packet, you'll never find it either. Some employee leaves the State Department with his laptop in hand...on the way home, the 'disabled' Wifi card picks up a trigger beacon, and spits out everything its learned that day.




RE: Oh really?
By fic2 on 6/14/2006 12:19:37 PM , Rating: 2
Oh, well since you strictly forbid it I am sure that it never happens. Like all the recent news articles about laptops with financial/social security number info on them that have been stolen even though it is strictly forbidden by most employers from taking such info out of the building.


RE: Oh really?
By kextyn on 6/14/2006 1:02:11 PM , Rating: 2
See my post 3 posts above yours.


Where's the news?
By Doodlebop76 on 6/14/2006 10:09:51 AM , Rating: 2
I read the article from the People's Daily and the only mention of anything pertaining to Lenovo is this single sentence: "US restrictions in purchasing China's Lenovo computers imply that the 'technology threat' is a similar reason why the US has never relaxed its hi-tech export to China. "

How does that translate into a blanket ban on purchasing Lenovo computers? Where's the US government directive on the issue?




RE: Where's the news?
By wil2xl on 6/14/2006 10:20:52 AM , Rating: 2
um it says right there in the original article's 4th paragaph:

"the US State Department announced that due to considerations in security, it has decided not to buy China's Lenovo computers for its national confidential network."


RE: Where's the news?
By Doodlebop76 on 6/14/2006 10:36:16 AM , Rating: 1
OMG, that's almost a month old! The rest of the press had the story when it broke in May!

See: http://www.infoworld.com/article/06/05/19/78504_HN...


RE: Where's the news?
By shadowzz on 6/14/2006 10:44:55 AM , Rating: 2
Uh, well dailytech linked to an article they did about the same time in may. I think this is either somethign different or somethign more.

http://dailytech.com/article.aspx?newsid=2445


RE: Where's the news?
By fungry on 6/14/2006 10:47:45 AM , Rating: 3
the may article was simply a query... that it was a possibility. This article is clarifying that to the public. Get your tenses right guys... future tense does not equal to present/past


RE: Where's the news?
By Doodlebop76 on 6/14/2006 11:08:39 AM , Rating: 2
From the May 19 Infoworld story:

quote:
The U.S. Department of State will not use Lenovo Group computers on a classified network because of ongoing concerns about the company's Chinese government ties, a U.S. congressmen has announced.


The source for DailyTECH's "news" is merely parroting stuff that was known last month.

There's no news here... move on.

;)


RE: Where's the news?
By Knish on 6/14/2006 5:08:24 PM , Rating: 2
Uh, by your logic the article you pasted is just parrotting march 30 article by dailytech:
http://dailytech.com/article.aspx?newsid=1497

But then again the article you pasted didn't mention that the Chinese officials confirmed it either. Odd considering I saw a Wash Times post confirming the government bought the notebooks.

So here I am presented with two differring acounts of the story on June 14th on Dailytech and Wash Time (the link was provided in the Dailytech article), while infoworld... is running an editorial about how Apple hates its own users.

Infoworld is the MTV of tech news. Sorry.


Two things
By Ringold on 6/14/2006 5:07:52 PM , Rating: 4
1) I just glanced at all the parts in my case, and the only part that ever came with "Made in the USA" was the case.. which I suspect really was "Assembled in the USA" upon unloading from the freighter. Oh, and this custom fan controller thingy thats useless. If China wanted to, or anybody wanted to, they could get a custom ASIC or whatever stuck on any motherboard, made by anybody, including Dell or HP. It just takes a few people in the right positions along the supply chain willing to do it for the nation of China or for money. Paranoia about a particular country gets us nowhere.

2) I've concluded that a couple uber-regular posters here, based on the threads I occasionally read, either need to get jobs, eat, sleep and have more sex, OR are paid by either a political party, PAC, or some other special interest group. Only explinations I can even see for such frequent posting, such polarizing posts, and such narrow-viewed and close minded posts. No name, though, since one or two actually fits my personal politics. :P




RE: Two things
By masher2 (blog) on 6/14/2006 5:24:47 PM , Rating: 2
Once again, there is a vast difference between "assembled from parts produced in several foreign nations", to "designed, specified, manufactured, asssembled, shipped, and sold by a single company, a firm controlled directly by the Chinese Government". While there may be risk in both cases, its patently obvious the risk is far higher in the latter instance. So why take the chance...especially when there are equal-quality, equally priced alternatives?

> "I've concluded that a couple uber-regular posters here, based on the threads I occasionally read, either need to get jobs, eat, sleep and have more sex,"

One of the truisms of web forums, eh? No matter how much you post, anyone who posts more than you is a no-life loser, whereas anyone who posts less is a clueless noob.

Such is life.




thank democracy for this.
By 8steve8 on 6/14/2006 11:59:09 AM , Rating: 2
this is simply a govt office trying to stay out of policital hot water..
OBVIOUSLY the experts know that the concern is humurous....
but if ur running the office, why take the head from some dumb voters who can in-effect, fire you!

haha gotta love democracy

where the dumb decide.




RE: thank democracy for this.
By 8steve8 on 6/14/2006 12:00:06 PM , Rating: 2
take the HEAT... not take the head...

sorry about the typo.
(why is there no *edit function)


RE: thank democracy for this.
By masher2 (blog) on 6/14/2006 12:03:14 PM , Rating: 1
> "OBVIOUSLY the experts know that the concern is humurous.... "

Actually, dozens of security experts have all agreed its a very real concern. Sorry to disapoint you.


hahahahaha
By Samus on 6/14/2006 12:18:53 PM , Rating: 2
I can't begin to comprehend how retarded this is.




RE: hahahahaha
By fic2 on 6/14/2006 12:27:16 PM , Rating: 2
<sarcasm>Sadly I believe that you couldn't comprehend this...</sarcasm>


Short Memories...
By jskirwin on 6/14/2006 9:31:51 AM , Rating: 2
Those who think the gov't is being paranoid have short memories.

Back in the 1980s the USA needed to replace its embassy in Moscow. In order to keep costs down it hired local contractors to do most of the work.

When the building was near completion, a secure inspection revealed that the place was riddled with surveillance devices. The problem was so bad that the US ended up tearing down the building and starting from scratch using contractors and personnel it vetted. (http://www.fas.org/irp/congress/1990_cr/h901025-em...)

Is it such a stretch to believe that the Chinese have not acted similarly - especially since they have been actively recruiting hackers for the People's Army? In Spring 2001 over 200 gov't services were attacked by Chinese hackers in revenge for the incursion in Chinese airspace of a USAF recon plane.

Even allies spy on each other, and China is not an ally by any measure. It views the US as its natural enemy, and will act in its own national interests. The United States should do the same.







Definitely a wise choice
By ss284 on 6/14/2006 2:46:15 PM , Rating: 2
The government dropped the purchase because they know themselves that digital espionage via computers is a piece of cake. Its foolish to think that both the US Government and the PRC havent experimented with or actually used such a method before. Its the one of the reasons why China is developing its own computer architecture as well as moving away from Windows for government PCs.

Even if there is no foul play involved, why would you even risk it? Security is the highest priority. Plus, most of the money inevitably returns to American business. Its a win-win situation.

Anyone who thinks China has any kind of positive intention to help the USA is a moron.





By a1trips on 6/14/2006 5:01:58 PM , Rating: 2
Amazing how people will talk at length and miss the forest for the Trees.
Every Single american manufacturer, no matter which industry.. Puts in secret doodads and codes and ASICS based on intelligence and CIA requests.. Remember the whole Gulf war 1 , Ci analyst bragging on CNN how every computer in Iraq was broadcasting like a BEacon.
Or how the FBI brags openly about secret markers on cars they use to Ident cars.
Fact IS, if a Chip was designed in america, those things are buiilt in.. The fact is the IDiots are afraid the chinese will figure out how to switch those on, lol
and no, I am Not kidding.. THink echelon




Don't buy 'em...
By INeedCache on 6/14/2006 6:23:41 PM , Rating: 2
There could surely be weapons of mass destruction hidden within the computer. Perhaps instead of a chipset fan, we have a WMD. Just one inside the Pentagon, and poof! This could happen with any board made in China, which most are. I think we need to ban PCs from America, and use only American made sliderules.




be afraid!.. be very afraid..heh
By a1trips on 6/14/2006 9:23:32 PM , Rating: 2
i commented about missing the forest for the trees and Upon rereading, realized i had done the same.

1. As earlier posters have commented..( i'm not sure if that statement is grammatically accurate,or a bad pun).. paranoia is a useful thing.. In small measures. I was enjoying the discomfiture felt by the US lawmakers now, when the country initiated the wholesale privacy intrusion mechanisms that lead us to this farcical nightmare today... But yes, be wary of the Chinese,just don't be the one to cast the first stone.

2.ALso, this concern isn't Humorous, as some others seem to think. Most readers here are uber intelligent adults, heh.. so they are aware of how many shades there are between black and white hats.

3.Security is offtopic, and i will refrain from commenting on
electronic security.

A12




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