27 January 2005 IBM’s proposed sale of its loss-making PC business could face delays as political concern mounts in the US over the $1.25 billion deal with Chinese vendor Lenovo.

Three influential Republicans, including the chairs of the International Relations Committee and the Armed Services Committee, have written to US Treasury secretary John Snow demanding further scrutiny of the deal, saying the deal may threaten national security.

The letter called for an extended review of the deal, “given the relationship between so-called ‘private companies’ in communist states and their government.”

IBM needs the approval of the Committee on Foreign Investments in the United States (CFIUS) to complete the deal. It is rare for the CFIUS to block deals of this kind. But, financial newswire Bloomberg reported last week that the US Justice Department and the Department of Homeland Security, both of which sit on the secretive committee, have issues with the sale.

IBM announced the sale of its PC arm in December 2004, having struggled to make the manufacture of PCs profitable for a number of years. The company said that it would concentrate on corporate systems, such as servers.

Beijing-based Lenovo holds a 29% share of the ever expanding Chinese PC market, and would move up to third place in the PC market rankings should the sale take place. President Yuanqing Yan said the deal with IBM would provide them with the “global scope” to compete in worldwide markets.

“We will cooperate with the U.S. Government positively,” said Lenovo spokesman Guo Tongyan. “The acquisition is making progress successfully,” he added.