SAN FRANCISCO - A CHINESE technology company has expressed interest in buying a US computer disk-drive maker, raising concerns among American government officials about the risks to national security in transferring high technology to China.

Mr William Watkins, chief executive of Seagate Technology - one of the two remaining US drive makers - disclosed the overture in an interview.

Such a possibility has resurrected issues of economic competitiveness and national security raised three years ago when Lenovo, a Chinese computer maker, bought IBM's personal computer business.

Mr Watkins did not identify the Chinese company, but said 'the US government is freaking out' over the possible acquisition.

Although disk drives do not fall under a list of export-controlled technologies, the attempted purchase of an American diskdrive company would require a security review by the federal government, according to several government officials.

In recent years, modern disk drives, used to securely store vast quantities of digital information, 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 provide data encryption.

That could raise the spectre of secret tampering with hardware or software to make it possible to pilfer information via computer networks, intelligence officials have warned.

Seagate, based in Scotts Valley, California, has recently started selling drives with hardware encryption capabilities.

Mr Watkins said that Seagate, the largest US drive maker, was not for sale, but that if a high enough premium were offered to shareholders, it would be difficult to prevent a sale.

The other disk-drive company is Western Digital, based in Lake Forest, California. Officials there declined to comment on the possible acquisition.

Treasury officials declined to comment on possible Chinese overtures for an American diskdrive maker.

With a booming economy and US$1.33 trillion (S$2.03 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 US economic competitiveness, the acquisition of American companies by Chinese companies is regarded with more suspicion, particularly in the high-technology sector.

'Seagate would be extremely sensitive,' said an industry executive who participates in classified government advisory groups.

'I do not think anyone in the US wants the Chinese to have access to the controller chips for a disk drive. One never knows what the Chinese could do to instrument the drive.'

Said Mr Michael Wessell, a member of the US-China Economic and Security Review Commission, a group that monitors the national security implications of trade with China for Congress: 'This is clearly a critical component of a computer system, and the purchase by the Chinese or other nations merits a full review to determine what our risks are.'

NYT