Chinese Seek to Buy a U.S. Maker of Disk Drives
New York Times
SAN FRANCISCO, Aug. 24 — A Chinese technology company has expressed interest in buying a maker of computer disk drives in the United States, raising concerns among American government officials about the risks to national security in transferring high technology to China.
The overture, which was disclosed by the chief executive of one of the two remaining drive makers in the United States, William D. Watkins of Seagate Technology, has resurrected the issues of economic competitiveness and national security raised three years ago when Lenovo, a Chinese computer maker, bought I.B.M.’s personal computer business.
Tensions have been increasing lately between the countries over China’s ambitions in developing its military abilities and advanced technologies for industrial and consumer uses.
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.
In recent years, modern disk drives, used to store vast quantities of digital information securely, have become complex computing systems, complete with hundreds of thousands of lines of software that are used to ensure the integrity of data and to offer data encryption.
That could raise the prospect of secret tampering with hardware or software to make it possible to pilfer information via computer networks, intelligence officials have warned.
Seagate has recently begun selling drives with hardware encryption abilities.
Mr. Watkins did not identify the Chinese company. But he said that the possibility of an acquisition had sent alarm bells ringing at some government agencies.
“The U.S. government is freaking out,” Mr. Watkins said during an interview on Thursday.
Reached Friday night, Treasury officials declined to comment on possible Chinese overtures for an American maker.
While Mr. Watkins said that Seagate, which is the largest drive maker in the United States, was not for sale, he also said that if a high enough premium was offered to shareholders it would be difficult to stop.
Seagate’s shares rose 1.05 percent Friday to close at $24.96 and were up about 4 percent for the week after news that it might enter the flash memory market. There does not appear to have been any significant increase in trading of Seagate options.
With a booming economy and $1.33 trillion in foreign-exchange reserves, Chinese companies are in a position to acquire American companies, as Japanese and West European companies were several decades ago. While those earlier acquisitions were often opposed out of fears that they would damage American economic competitiveness, the acquisition of American companies by Chinese companies is regarded with more suspicion, particularly in the high-tech sector... All the rest of the story fit to print.