President Donald Trump has blocked Singapore-based Broadcom’s proposed $140bn (£100bn) takeover of Qualcomm on grounds of national security.
His order cited “credible evidence” that a takeover “threatens to impair the national security of the United States”.
Qualcomm was already trying to fend off Broadcom’s bid.
A takeover would have created the world’s third largest computer chipmaker.
It would also have been the biggest takeover in the technology sector.
The presidential order said: “The proposed takeover of Qualcomm by the Purchaser (Broadcom) is prohibited, and any substantially equivalent merger, acquisition, or takeover, whether effected directly or indirectly, is also prohibited.”
The bid attempt was already being investigated by the Committee on Foreign Investment in the US, a multi-agency led by the US Treasury Department.
Broadcom had been pursuing San Diego-based Qualcomm for about four months.
The sector is in a race to develop chips for the latest 5G wireless technology, and Qualcomm was considered by Broadcom a significant asset in its bid to gain market share.
The US company had rejected approaches from its rival on the grounds that the offer undervalued the business, and also that any takeover would face antitrust hurdles.
Earlier this year, Chinese telecoms giant Huawei said it had not been able to strike a deal to sell its new smartphone via a US carrier, widely believed to be AT&T.
The US also recently blocked the $1.2bn sale of money transfer firm Moneygram to China’s Ant Financial, the digital payments arm of Alibaba.
Source: BBC News