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France's Altran buys Indian semiconductor design firm SiConTech

Livemint:  July, 2015

Bengaluru: Altran Technologies SA has agreed to buy SiConTech, a Bengaluru-based company that designs semiconductor chips and counts chip maker Qualcomm Technologies Inc. and electronics giant Samsung Electronics Co. Ltd as its clients, for an undisclosed sum.

The deal would give Altran, a technology consulting firm, access to SiConTech’s clients, and the semiconductor chip design domain, which it doesn’t operate in, said a statement on Tuesday.

It is the first deal in the semiconductor space in which a foreign multinational corporation has acquired an Indian start-up, said Sanjay Kumar, chief executive officer (CEO) and managing director, Altran India.

The move comes at a time when the engineering services sector is witnessing some consolidation. Hyderabad-based Cyient Ltd acquired two start-ups this year, and Singapore-based QuEST Global Services Pte Ltd acquired Germany-based EDF GmbH in February.

In the last three years, Altran India has adopted an aggressive growth strategy by infusing additional capital into the company and expanding its offerings.

“Since then we have scaled up by four times,” Kumar said. “The chip design business is getting extremely competitive and therefore the role of India in driving this is going to increase substantially.”

SiConTech CEO Naveen Chava, who previously worked with Texas Instruments for 14 years before starting the company in 2010, will head Altran’s intelligence systems unit that is going to be integrated with SiConTech.

Other SiConTech employees are expected to continue in their old roles. With their addition, Altran’s workforce in India would double from about 550 to 1,100.

“Our reach, our expertise is limited to semiconductor companies, but with Altran, our expertise can reach many more customers. Today we are very strong in India, China and the US. We definitely think we can do much more in all other continents,” said Chava.

Semiconductors are used in a wide range of applications such as in mobiles, telecommunications, aerospace, information technology and defence. Most of these areas are witnessing rapid growth, leading to a growth in the semiconductor industry as well.

According to the India Electronics and Semiconductor Association, the Indian electronic system design and manufacturing industry is expected to touch $400 billion by 2020, up from $94 billion in 2015.

“Earlier, there was a talk about the semiconductor space getting saturated, but with the new Internet of Things coming, again we are going to see a boom in the next two-three years,” said Chava.

Acquisitions like this are a win-win situation in terms of local firms who would drive up the value-chain, according to M.N. Vidyashankar, president of lobby group India Electronics and Semiconductor Association and former principal secretary, informatino technology, to the government of Karnataka.

“We do the designing for the rest of the world. The only thing is intellectual property (IP) is not with us. If, as a part of Make in India mission, IP also rests with us because of schemes like EMC (electronic manufacturing clusters) and EDF (electronic development fund policy) to ensure that we have IP also,” Vidyashankar said. “In the next 5-10 years alone, in addition to designing, we’ll also have IP and patents.”