Is Lenovo Trying to Purchase Disk Drive Maker?

RESEARCH TRIANGLE PARK, N.C. – A “Chinese technology company” may try to buy Seagate Technology, and the alarm bells are ringing about whether such a purchase would pose a security risk to the U.S.

Is that Chinese company Lenovo?

William Watkins, the top executive at Seagate, told the New York Times that a Chinese firm he didn’t identify had expressed an interest in buying the firm. It’s one of two disk drive makers in the U.S.

Regardless of whether the company is Lenovo, which has its headquarters in Morrisville but maintains most of its operations in China where the company was born, some security experts interviewed by the Times said such a sale could threaten U.S. security.

Lenovo has been forced to jump through national security hoops since it announced plans to purchase IBM’s personal computer division two years ago. And a sale of PCs to the U.S. State Department drew howls of protest in Congress.

"Although disk drives do not fall under a list of export-controlled technologies, the attempted purchase of an American disk drive company would require a security review by the federal government, according to several government officials," the Times said.

But the matter is extremely sensitive.

“The U.S. government is freaking out," Watkins told the Times.

The tension between the U.S. and China over high tech and potential military uses of U.S. technology acquired by the Chinese isn’t going away anytime soon. China’s incredibly rapid economic growth and increasing trade surplus with the U.S. puts more pressure on U.S. companies to compete. The military tension between the two giants makes matters worse.

Caught in the middle are companies such as Lenovo, Red Hat, IBM, Cisco, Nortel, Dell, HP and so many others that sell technology globally.

If Seagate is sold to a Chinese firm, the fireworks will be something to watch.