IBM restructures server production

IBM will outsource its server manufacture after sealing a joint venture deal with China Great Wall Computer Corporation.

The agreement will see a newly formed company, International Systems Technology (IST), 80 per cent of which will be owned by IBM and 20 per cent by China Great Wall.

The joint venture will initially produce IBM's eServer xSeries, but is also expected to produce the forthcoming OpenPower Linux-only server.

IST replaces a previous partnership between the two companies, called International Information Technology Company, which produced PCs and servers.

With the sell-off of IBM's PC division to Lenovo the latest deal confirms China Great Wall's position with IBM.

Brian Gammage, vice president at analyst Gartner, told vnunet.com: "It makes sense. IBM is no longer making the PC products, and the organisation of their server production needed to be restructured."

Lu Ming, president of China Great Wall, and IBM vice president Tim Carroll shook hands on the deal yesterday. IST will be based in South China's Guangdong province and will have an export factory in the Futian Bonded Area of Shenzhen.