IBM Servers Under Review In Chinese Financial Sector

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According to a report from Bloomberg News, well-placed sources say the Chinese government is undertaking a review regarding domestic banks’ reliance on high-end servers from International Business Machines Corp.(NYSE:IBM) could compromise China’s financial security.

The sources say that Chinese government agencies, including the People’s Bank of China and the Ministry of Finance, have requested that several domestic banks replace their IBM servers with a local brand in a trial program.

IBM statement

“IBM is not aware of any Chinese government policy recommending against the use of IBM servers within the country’s banking industry,” Jeff Cross, an International Business Machines Corp.(NYSE:IBM) spokesperson, wrote in an email. “In fact, news reports now state that China’s National Development and Reform Commission has not heard of any alleged directive to that effect. IBM is a trusted partner in China and has been for more than 30 years.”

Analyst comment

Analysts point out that China’s IT industry has advanced enough to supply nearly all of its own needs, and that security is ultimately the primary concern. “Security trumps everything,” explained Duncan Clark, chairman of BDA China Ltd., a Beijing-based consultant to technology companies. “China doesn’t need the U.S. companies in the way it did for the last few decades.”

Snowden/NSA leaks in backdrop

The leaks from Edward Snowden regarding the extent of the NSA spying activities on both individuals and foreign governments has caused other nations to harbor suspicions about U.S.-produced IT devices.

The review of the IBM servers in the Chinese financial industry comes a week after five Chinese military officers were indicted in the U.S. for hacking and espionage. Furthermore, nearly all analysts agree that former NSA contractor Edward Snowden’s revelations last summer have already negatively impacted U.S. technology sales in China.

The Chinese government also announced last week said it plans to more closely supervise technology companies operating in China, and the Financial Times reported last Friday that most state-owned businesses had been ordered to end their relationships with U.S. consulting firms.

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