The University of Manchester has been prevented from licensing vision-sensing technology to a Chinese company.
The UK government has stopped the move on national security grounds.
The licence agreement was blocked under the National Security and Investment Act, which came into force this year.
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The deal with Beijing Infinite Vision Technology Company Ltd was to develop, test and verify, manufacture, use and sell licensed products using 'Scamp-5"and "Scamp-7' vision sensors.
The Department for Business, Energy and Industry Strategy said there was the "potential that the technology could be used to build defence or technological capabilities which may present national security risk to the United Kingdom".
In a statement, the university said: "We will, of course, abide by the decision that has been made."
It had "thorough internal processes in place to look at proposed international agreements".
The university added: "These were followed in this case and, in line with the legislation, we voluntarily referred this agreement to the UK government."
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