IBM Cites Shanghai Airport Backing as China Cyber Tensions Rise

Jun 05, 2014 12:01 pm ET

June 6 (Bloomberg) -- International Business Machines Corp. said its cloud computing work for the state-owned Shanghai Airport Authority shows it’s a “trusted partner” in China, amid rising tensions over cybersecurity that led to a government review of its server hardware.

The IBM system, the first phase of which was completed in March, helps the airport manage everything from airplane taxi times to passengers waiting on a concourse, the Armonk, New York-based company said in a statement yesterday. The system “dramatically” improved the punctuality of flight departures, according to the statement.

Tensions over cybersecurity are rising after U.S. prosecutors last month charged five Chinese military officers with allegedly hacking into computers of American companies. China is reviewing whether domestic banks’ reliance on IBM’s high-end servers compromises the nation’s financial security, Bloomberg News reported May 27 citing people familiar with the matter.

“We are proud to be selected by Shanghai Hongqiao International Airport as its trusted partner,” Ernie Hu, IBM’s vice president for its software group in China, said in the statement. “IBM has a long history of innovation in transportation, working with the world’s leading airlines and airports.”

IBM said last month it wasn’t aware of any government policy against use of its servers. The company’s Shanghai-based spokesman Anthony Guerrieri said yesterday’s announcement is unrelated to any government reviews.

The system supplied to the Shanghai Airport Authority, which operates the city’s Pudong International Airport and Hongqiao International Airport, features IBM’s DB2 data server, and the Tivoli Directory Server and Security Identity Manager, according to IBM’s statement yesterday.

IBM said its China sales fell 20 percent in the first quarter during an April conference call, and Chief Financial Officer Martin Schroeter said the challenges were cyclical. While IBM doesn’t break out sales figures by country, 14 percent of its 2013 revenue came from Asia Pacific excluding Japan, according to data compiled by Bloomberg.