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IBM Becomes Target of Chinese Bank Security Study

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In what appears to be a retaliation to the US official claims of Chinese Government Officials hacking US companies, the Chinese government has quietly advised their banks to review their security policies and hardware implementations, especially those with IBM hardware. While this study of Chinese Banking security risks is not an official or public one, Bloomberg has spoken to four sources that confirm that such a review is under way and is currently focused on IBM, but likely involves others as well. IBM itself has a very interesting history in China as the company claims to have been doing business there for the past 30 years, which may both work for them and may also work against them. Additionally, IBM recently announced that they would be offloading their ‘low-end’ server business to Lenovo while they continue to hold on to their high-end and high-performance server businesses that don’t operate on x86 processors.

Knowing IBM, they would be pushing as much of their high-end products as possible on these banking customers in China, even though there’s a good chance that the majority of current IBM hardware in China is ‘low-end’ server stuff that Lenovo will be taking over. After all, Lenovo is a Chinese company and I believe that the Chinese would love to build and sell their own servers to their own banks instead of having to buy from American companies. And frankly, IBM does have a lot of competitors in China already that are more than capable of competing against Lenovo for the banks’ business. But even so, companies like Inspur have a lot of growth potential and if anything, it gives them an opportunity to replace IBM’s high-end business in China as tensions increase between the two countries.

Ultimately, IBM is likely not responsible for trying to make China’s banking system insecure or involved in any sort of American plots to monitor China’s banking system, even though we already know through Snowden disclosures that the NSA has already been intercepting hardware bound for abroad from US companies and embedding it with their own backdoors. IBM is also trying to gain some momentum in China with their POWER 8 processor, trying to offer themselves as an alternative to Intel’s Xeon processors, however, both of these products are made by American companies and may prove a bit more difficult to sell into China than had originally thought. Sure, there aren’t many other options available to most of these companies or the server builders that use them, but it may spur the Chinese to consider alternatives (that already exist) like MIPS, Alpha and others. This just means another threat to IBM’s business after they’ve already suffered quite a bit of damage last year due to the Snowden disclosures.