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The USCC launched a probe against Lenovo, but many wonder if the accusations are warranted

The United States government is planning to spend roughly $13M USD on computers from Lenovo. The company, famous for buying up IBM's PC manufacturing arm, is working on a deal with the US government to produce roughly 16,000 computers. Just recently, the U.S.-China Economic Security Review Commission (USCC) has requested that Lenovo be probed for any concerns about possible spying, eavesdropping or worse.

The supposed problem presented by the USCC is that the 16,000 computers are being built by a Chinese-mainland company.  The USCC argues that a foreign intelligence like that of the Communist Party of China (CPC) can use its power to get Lenovo to equip its machines with espionage devices. Lenovo has strongly declined that it is involved in any such activities.

Many analysts would call these probes are excessive and knee-jerk.  When manufactured under IBM, almost all Lenovo PCs were built in the People's Republic of China and the Republic of China (Taiwan) to some degree or another anyway.  Of the top 10 system builders in the US, eight have some component manufacture attributed specifically to ECS-Tatung, at Taiwanese corporation that only assembles exclusively in the PRC.  Of the other two not represented by ECS-Tatung, Dell and Apple, Dell has a strong reliance on ASUStek -- another company that builds exclusively in the PRC. 

Despite the probe, Lenovo says that its international business, especially those that deal with the US, follow strictly laid out government regulations and rules. Lenovo also claims that even after purchasing IBM's PC division, its international business has not been affected negatively. Interestingly, in an interview with the BBC, Lenovo mentioned that an open investigation or probe may negatively affect the way that the company deals with future government contracts or bids. The Lenovo representative did not explain details on exactly what negative implications would occur if there were future investigations. The 16,000 PCs to be built for the US government are actually assembled outside of China in Mexico, Taiwan and Raleigh -- an oddity in the PC manufacturing business.

A top tier motherboard manufacturer spokesman spoke to us off the record claiming the Lenovo probe has "foreboding" implications.  If US companies are intimidated by probes of the USCC, such probes could be easily applied to virtually every PC manufacturer in the US: Intel motherboards are built by Taiwanese Hon Hai Precision Industries from facilities in Shenzhen; Acer components are built by component manufacturers in Shanghai; Dell PCs are assembled in factories in Suzhou and Shanghai.  The same spokesperson went on to say "We [Taiwanese manufactures] do more work in China than we do anywhere else in the world. I don't even want to think about what would happen to our US clients if we got a USCC probe."

CDW Government, the company originally contracted to fill the orders for the US government also carries several brands that are assembled in the PRC including Acer, BenQ, D-Link, HP, Sharp and Toshiba. 

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RE: So we should all by Macs?
By masher2 on 3/30/2006 9:54:27 AM , Rating: 2
You miss the point. There is a vast difference from a computer containing a part or two manufactured in China...and a computer designed, built, and shipped by a company owned directly by the Chinese Government.

And if you think China has no interest in US government and military secrets...well you haven't been following the news the past 10 years.

RE: So we should all by Macs?
By JackPack on 3/30/2006 1:07:06 PM , Rating: 2
by a company owned directly by the Chinese Government
Let's not spread FUD.

RE: So we should all by Macs?
By bob661 on 3/30/2006 2:25:58 PM , Rating: 2
Let's not spread FUD.
What's FUD about that statement? Can you disprove it?

RE: So we should all by Macs?
By masher2 on 3/30/2006 2:26:13 PM , Rating: 3
> "Let's not spread FUD."

FUD? Sorry, its simple truth. Lenovo is 42% owned by Legend Holdings, which was established by the Chinese State Academy of Sciences, and who still maintains majority control.

Now 42% may not be a majority share...but given it's over three times larger than the next largest stockholder, Legend maintains complete control over the actions of Lenovo. Furthermore, an additional 6% of Lenovo is owned by a Chinese based private equity group, which itself is owned by unknown sources.

One of the first acts Lenovo took was to assign all rights to patents and other IP over to Legend Holdings.

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