On October 27, 2024, the latest news that Siemens AG plans to acquire Altair Engineering, an engineering software developer, shook up the global engineering software market. Siemens’ move marks an important step in its transformation from a traditional manufacturer of large machinery and equipment to a company more focused on software and technology solutions.
Siemens plans to acquire Altair Engineering at a valuation of $9.1 billion, which is not only one of the largest acquisitions in Siemens’ history, but also represents an important strategic layout on the road to digital transformation. Altair Engineering is a leader in engineering software, with software solutions serving a wide range of industries, including aerospace, automotive, energy and financial services.
Background to the Acquisition
The acquisition comes against a backdrop of significant changes that the design and simulation software industry is undergoing. With the development of semiconductor industry, the difficulty of chip development has increased, and design technology collaborative optimization (DTCO) and system technology collaborative optimization (STCO) have become industry trends. In this context, the bidding war among EDA giants is particularly important.
Altair Engineering, a Troy, Michigan-based company, was founded in 1985 by James R. Scapa, George Christ and Mark Kistner. It started as an engineering consulting firm and later expanded its product line into product development and computer-aided engineering (CAE) software. In the 1990s, Altair was known for software products such as HyperWorks, OptiStruct, and HyperMesh, which were commonly used in product development for the automotive industry. Today, Altair’s product line has expanded to include multiple areas such as simulation, HPC, AI, and iot, serving organizations across industry segments to enable them to make more informed decisions in an increasingly connected world.
As the development of process technology slows down and the number of transistors increases, chip development becomes increasingly difficult. To achieve the best power, performance, and area (PPA) results, chip designers must work closely with foundries to optimize their design and process techniques, an approach called Design Technology Collaborative Optimization (DTCO). Going forward, chip designers will have to build multi-chip solutions to better meet demanding applications, go beyond DTCO and optimize their solutions at the system level, an approach called System Technology Collaborative Optimization (STCO). In this context, the bidding war among EDA giants is particularly important
For Siemens, a potential acquisition would be in line with the company’s shift to software and give it more leverage in EDA. A potential acquisition by Siemens would not only boost its profitability in areas such as factory automation, but also compete with automation giants such as Rockwell Automation and Schneider Electric in digital tools. In addition, both Siemens and Altair play key roles in 3D printing. Siemens’ Digital Industrial Software (DI Software) provides key platforms such as NX and Simcenter, which are primarily used to simulate and optimize 3D printed parts. This allows manufacturers to streamline production processes and reduce the number of expensive iterations.
Altair, on the other hand, is known for its expertise in topology optimization and simulation. Altair Inspire and HyperWorks provide powerful tools for maximizing the material efficiency and performance of 3D printed components. These tools are particularly critical in industries such as automotive and aerospace where lightweight and high-strength components are critical.
Another important backdrop to this bidding war is that Siemens completed its acquisition of Mentor Graphics, one of the three EDA giants, earlier this year. If the rumors are true, then after Synopsys’ acquisition of Ansys, the two giants of EDA have started a new round of competition.
Key Implications of the Acquisition
Enhanced Digital Twin Capabilities: Siemens has long been a leader in digital twin technology, and Altair’s software could add depth, particularly in multi-physics simulation, design optimization, and analytics. Integrating Altair’s advanced simulation capabilities would provide Siemens customers with more comprehensive digital twin solutions that cover a broader range of applications.
Expansion of Portfolio in High-Performance Computing and AI: Altair’s expertise in high-performance computing (HPC) and AI-driven data analytics could allow Siemens to deliver more scalable and sophisticated AI-powered industrial solutions. This could help Siemens stay competitive in markets demanding real-time data processing and analytics.
Improved End-to-End Design and Manufacturing Solutions: With Altair’s software offerings, Siemens would have an enhanced toolkit to support the entire product lifecycle—from conceptual design and prototyping through to manufacturing and predictive maintenance. This addition could strengthen Siemens’ position against competitors like Dassault Systèmes and Ansys.
Potential Challenges and Integration: Integrating Altair’s expansive software suite with Siemens’ existing platforms may pose challenges. Aligning the cultures, optimizing the product portfolio, and maintaining innovation momentum would require significant focus.
Altair Engineering’s technical and market advantages are certainly attractive. It has strong software and cloud solutions in the areas of simulation, Internet of Things, high performance computing (HPC), data analytics and artificial intelligence (AI), which can help Siemens take more solid steps on the road to digital transformation.
In short, Siemens’ planned acquisition of Altair Engineering is not only a battle between companies, but also an important bet on future technology trends. Whatever the outcome, the bidding war will have a profound impact on the landscape of the global engineering software industry. As technology continues to advance, we can expect to see more exciting engineering breakthroughs in 2024.
