Beijing-based tech company Unisplendour Corp has pulled out of a proposed USD3.8 billion investment in the U.S. disk drive maker Western Digital Corp because the Chinese firm deems the U.S. government would not approve the deal. Unisplendour, a subsidiary of Tsinghua Holdings, said the decision was made after the Committee on Foreign Investment in the United States (CFIUS) announced it will investigate the deal for security reasons. The Chinese company had been attempting to purchase a 15% stake in Western Digital since September. The deal would have made Unisplendour Western Digital’s largest shareholder and given it a board seat in the California-based company which sells hard drives to a long list of U.S. government agencies. Both companies said they would still set up a USD158 million software joint venture, with the Chinese firm holding a 51% stake. Western Digital is bidding for flash-memory manufacturer SanDisk Corp but has trimmed its offer after Unisplendour canceled its investment. It was the third time this year that an investment plan was stranded because of security concerns from the U.S. Gene Cao, Principle Analyst at Forrester Research, said the scrapped deal adds uncertainties to future tech acquisitions. “Recent failed acquisitions underlined Chinese technology companies will find increasing difficulty when buying out a U.S. firm in both hardware and software segments,” Cao said, as reported by the China Daily.