IBM Forms Server Joint Venture with Chinas Great Wall Computer13 December 2004
IBM has formed a joint venture with Great Wall Computer Shenzhen Co Ltd. to manufacture servers for the Asia-Pacific region, settling uncertainty over how last week's sale of IBM's PC division would affect the area's server operations.
The new venture, International Systems Technology Company, will take over from a 10-year-old alliance between the two companies—called International Information Products (Shenzhen) Co Ltd.—and will use the same manufacturing premises.
IIPC, with a four-building factory based in the Futian Bonded Area of Shenzhen, was IBM's main manufacturing base for Intel-based hardware in the Asia-Pacific region, manufacturing laptops, desktops and servers. Its PC operations were included in the sale of IBM's PC division to Lenovo, but server manufacturing wasn't included. Uncertainty over the fate of IIPC's server business caused Great Wall's shares to fall 10 percent on Thursday.
On Sunday, however, Great Wall and IBM formally announced the new venture, ISTC, which is designed to take up where IIPC left off. As was previously the case with IIPC, it will be 80 percent owned by IBM and 20 percent owned by Great Wall, IBM said. ISTC will take over the Shenzhen plant's manufacture of xSeries and pSeries servers. It will initially be sharing the premises with the PC manufacturing lines controlled by Lenovo-owned IIPC, but will ultimately be separated off, said IBM's Tara Sexton, vice president of communications for Integrated Supply Chain, in a telephone interview.
Click here to read about IBM customers' reaction to the Lenovo deal.
"This is about drawing a line in the sand, distinguishing what's PCs and what's servers," Sexton said. "The new joint venture will continue the production of servers, while IIPC will continue to handle PCs and laptops. Asia is a huge growth opportunity, so the capability to manufacture servers for that market is very important."
IBM and Lenovo characterized the new venture as a formality and said manufacturing would continue seamlessly through the transition period. "All parties involved here are committing to make this a smooth transition that will minimize any impacts to our customers and our employees," said IIPC general manager Jeff Gallinat, in a statement. "Both companies will have bright futures, and will offer challenging work environments and opportunities for people to grow."
Source: Ziff Davis via Yahoo
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