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IBM PC unit sale to Lenovo faces security hurdle

Monday, Jan. 24, 2005 | 9:23 a.m.

U.S. regulators are raising national-security concerns over International Business Machines Corp.'s pending $1.25 billion sale of its personal-computer business to China's Lenovo Group, people familiar with the matter said.

Members of the Committee on Foreign Investments in the United States, including the Justice Department and Department of Homeland Security, worry that Chinese operatives might use an IBM facility in North Carolina to engage in industrial espionage, using stolen technologies for military purposes, said the people, who spoke on condition of anonymity.

IBM and Beijing-based Lenovo need the approval of the committee, which is chaired by the Treasury Department and includes 11 other federal agencies, to avoid a formal investigation and the need for clearance by President Bush. IBM and the government are negotiating the matter, which otherwise could scuttle the deal, the people said.

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