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US Checks China's Tech Challenge

The collapse of 3Com's $2.2 billion acquisition by Bain Capital and Huawei this week underlines the growing U.S. fear of China as a technology superpower armed with a wide range of security and storage IP.

National security concerns were said to be behind the decision by the Committee on Foreign Investment in the U.S. (CFIUS) to block the deal. Government reviewers homed in specifically on 3Com's links to the U.S. military following its $430 million acquisition of security specialist TippingPoint in 2004..

Huawei also has strong links to its own country's military, which in turn is rumored to support China's thriving hacker community.

Analysts have already warned that Huawei could suffer on account of its country's growing reputation as a hotbed for cyber-crime, something which appears to have added fuel to the U.S. government's unease over the 3Com deal.

Even an offer by 3Com to divest its TippingPoint business unit was reportedly unable to sway the federal committee, highlighting the government's nervousness about this deal.

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