"Mentor has a long history of losing out in bidding wars on acquisitions – we don’t have to do that anymore."
Wally Rhines, President and CEO, Mentor, June 25, 2018
There were plenty of fine words about compatibility and digital twins when Siemens completed its acquisition of Mentor roughly a year ago, but there were also still some doubts - both internally and externally.
At DAC 2018, the message from the company was that those have now been resolved. Senior management was at pains to point out that - true to its word - Siemens has carefully looked at Mentor and taken its integration slowly, surely and sympathetically. On that last point, another key message has been that the 'Mentor Graphics' established customers knew is no different from the 'Mentor, a Siemens business' of today.
Yet, as the opening quote from CEO Wally Rhines shows, at least one thing has changed in a big way. "We’ve done more acquisitions as a part of Siemens than we have in any year since 2002 and three out of four were in IC design," he also noted during a keynote DAC interview.
Specifically, Mentor has accessed its parent's checkbook to buy the following companies:
- Austemper Design Systems: A specialist in functional safety implementations in silicon.
- Infolytica: A developer of low frequency simulation tools for end applications such as motors.
- Sarokal Test Systems: a Finnish provider of test equipment for cellular networks, particularly the emerging 5G market..
- Solido Design Automation: A Canadian company focusing on variation-aware design and characterization with a strong position in the deployment of machine learning and AI for EDA.
There are notable similarities running across all four deals which may offer some clues to Mentor's acquisition strategy going forward (and, certainly, the word is that the company is not done yet).
First, Siemens got Mentor to look again at its market plans. "What’s fundamentally changed is that Siemens has forced us to put a strategic framework around how we are going to grow," explained Ravi Subramanian, Mentor vice president and general manager of its IC Verification Solutions Division.
"For every division the questions are, 'What are the opportunities?' 'Where do you think the puck is going to move?' 'How are you getting there?' 'How will you generate growth' and 'What can we do to enable that?'
"So, on the emulation and simulation sides, we have been looking across verticals for safety, security, and so on. And then across industries - 5G, datacenter, automotive, IoT. That defines the universe for the strategic space."
At the same time, however, it is noticeable that Mentor's acquisitions dovetail neatly with Siemens' higher-level corporate goals. There is a strong 'systems of systems' element in how Austemper and Sarokal will play into key Siemens PLM markets such as automotive and 5G. The precise motors enabled by Infolytica's strategy for Maxwell's equations have obvious implications across the robotics design and delivery process and next generation factory automation systems, another Siemens target. And which major conglomerate isn't trying to leverage AI and ML across as many of its tools and methodologies as possible?
Mentor's target strategy
Given all this, it's clear that Mentor had well-defined plans for each of its acquisitions in and of themselves. Solido and Sarokal are good examples.
As Subramanian explained, Solido will also plug directly into an earlier Mentor buy as well as helping in the AI race. "There already was a 10-year history with them because they had been working with our circuit simulators since they were developed by Berkeley Design Automation [which was acquired in 2014].
"We've now been able to accelerate their roadmap as a result. We've increased headcount in Saskatoon [Solido's main home] by 50% with more to come. With Solido, we can chart the path in verification starting with more sophisticated analytics, going to machine learning and on to reinforcement learning from there."
Jean-Marie Brunet, senior director of marketing for Mentor's emulation division, described how Sarokal will fit the new agenda.
"We bought Sarokal at the beginning of the year, but we'd been working with them for over a year - so we knew them well," he said. "They have a very specific market - 5G - for their physical hardware tester. It's a great product and we'll continue to sell that.
"But the goal is also to integrate their technology as a transactor on [the] Veloce [emulation platform]. Rather than being restricted to post-silicon bring-up, you'll do the same bring-up pre-silicon on Veloce. It gives you the complete food chain for 5G testing."
So, one thing is clear, from Mentor's point of view at least. Anyone who thinks this flurry of M&A from one of EDA's more traditionally circumspect players means Christmas has come early should think again. Any bidding giddiness has been restrained by that overall strategic plan - and it's one that doesn't just define targets but also areas where Mentor needs to build and extend its internal plays and resources.
We look at that theme in Part 2, with regard to how Mentor is bulking up its new acquisitions and extending the roles played by its existing divisions and tools. Then in Part 3, we look toward the future of one of Mentor's 'barometer divisions' - Tanner EDA.