3Com and its partners, Bain Capital Partners LLC and Huawei Technologies Co., withdrew their application to the Committee on Foreign Investment in the United States. Apparently the three companies could not appease security concerns brought about by the buyout of an American telecommunications legend by China's Huawei Technologies Co., is known for its strong ties to the Chinese government.

"We have not terminated the agreement," 3Com spokesman John Vincenzo said in an interview. "We have taken it out of the CFIUS process."

Huawei and 3Com have previously collaborated, as they have a non-compete agreement with 3Com's H3C (Huawei-3Com), a Chinese networking operation. An insider told AP that the $2.2 billion offer for 3Com is not on the table anymore. "The deal is not going to proceed," the person told the AP.

The Committee on Foreign Investment is part of the United States Treasury Department. The Committee monitors the effects of cross-national mergers and can block deals if it believes the nation's security would be placed at risk.

Huawei Technologies, founded in 1988, is China's largest communications equipment maker and specializes in research and development, production and marketing of communications equipments, and providing customized network solutions for telecom carriers. Apart from its China operations, Huawei also has R&D centers in Stockholm, Sweden; Dallas and Silicon Valley, U.S.; Bangalore, India; and Moscow, Russia. Telecom giant Vodafone awarded Huawei the 2007 Global Supplier Award for Outstanding Performance earlier this year. The company had revenue of around $8.5 billion in 2006.

3Com was founded in 1979 and started off by making Ethernet adaptor cards for many early 1980s computer systems, including the LSI-11, IBM PC, and VAX-11. In 2003, Huawei Technologies entered into a joint venture named Huawei-3Com with 3Com for Internet Protocol-based routers and switches, eventually selling its 49 percent stake to 3Com in 2007 for $882 million. Thus, Huawei has agreed to a non-compete clause for 18 months following the sale of its stake in Huawei-3Com. The company had revenue of less than $800 million in 2006.