Five consecutive years as the #1 semiconductor ER&D services provider, so what’s next?

In late 2020, market research and consulting firm Zinnov ranked Capgemini the top semiconductor engineering R&D (ER&D) services provider globally for the fifth consecutive year. The ranking is based on a complex formula that evaluates the breadth of domain expertise, delivery excellence, and global presence of the leading service providers. Receiving this top honor in 2020 is the culmination of almost two decades of mergers and acquisitions along with strategic decisions made to evolve with the changing semiconductor industry over time. This is the story of that journey and where we go from here.

The roots of Capgemini’s semiconductor ER&D services leadership trace back to 2002 when the first in a series of strategic M&A deals began (see Figure 1). Eighteen years later, the 2020 Capgemini acquisition of Capgemini Engineering secured the company’s undisputed dominant position in the global semiconductor ER&D sector.

Five consecutive years as the #1 semiconductor ER&D services provider, so what’s next?

Figure 1. Timeline of Capgemini semiconductor services evolution through acquisition.

The Capgemini story: Becoming the semiconductor services leader

Tracing the company’s evolution through the Zinnov Zones semiconductor ER&D ratings from 2016 to 2020 tells the story of Capgemini’s journey to semiconductor ER&D leadership. While the story begins in 2002 with the Capgemini Engineering-backed acquisition of Cambridge Consultants by its management team, semiconductor ER&D leadership reached critical mass in 2015 when US-based Aricent, a provider of software and communications outsourcing services to telecom companies, acquired India-based semiconductor design services company SmartPlay.

At the time, Aricent CEO Frank Kern made the bet that the future would be built on common semiconductor platforms: 5G wireless networks, smartphones, IoT, AI, graphics, etc. The SmartPlay acquisition placed Aricent on an ambitious path to become the leader in helping semiconductor companies build these platforms. With this infusion of semiconductor expertise and experience combined with venture-backed guidance, the following year, global management and strategy consulting firm Zinnov named Aricent the top-ranked semiconductor ER&D services provider.

Paris-based Capgemini Engineering was on a similar trajectory in 2015 with its acquisition of India-based SiCon Design Technologies. SiCon gave Capgemini Engineering a presence in India and added expertise in developing chips for a wide range of industries and applications. In 2016, Zinnov ranked Capgemini Engineering among the top five semiconductor service providers.

Two years later, Capgemini Engineering acquired Aricent, strengthening its presence in the North American and Indian markets and more than tripling its silicon design workforce. As a result, Capgemini Engineering became the top-ranked semiconductor services provider company by Zinnov in 2018 and 2019, servicing eight of the world’s top 10 semiconductor industry leaders. In April 2020, global IT leader Capgemini acquired Capgemini Engineering, becoming the top-ranked semiconductor services company, according to Zinnov.

Helping semiconductor companies and other industry leaders thrive

In addition to the strategic M&As that set Capgemini on the path to leadership, both Aricent and Capgemini Engineering made strategic business decisions along the way to strengthen its expertise and portfolio in line with the evolving needs of the semiconductor industry, including:

  • Evolving business models and value. For decades, the most common service engagement model for the semiconductor industry had been time and materials. But Aricent and Capgemini Engineering expanded their offerings by providing more value through turnkey projects, including end-to-end chip development, software and board development, industrializing chip design workflows and more.
  • Engaging as strategic partners. Today, most semiconductor engagements are a mix of chip design and collaborative partnerships designed to achieve specific engineering and business goals. These engagements often extend beyond the semiconductor client to include other value chain members such as IP vendors, semiconductor fabs, assembly and test, and more. These high-value opportunities have led to multi-year development programs integral to the semiconductor customer’s long-term development of new products and services.
  • Supporting clients beyond the chip. Today, more and more ICs are evaluated based on how well they serve a particular use case or application and less on performance, power and area. The burden of proving application “fitness” usually falls to the chip company, and to demonstrate this, they are delivering chips accompanied by software, boards, turnkey reference designs, embedded stack components, even prototypes and proof of concepts (POCs), etc. Both Capgemini Engineering and Aricent have evolved in step with this trend, providing software and hardware services to help clients prepare chips for specific products and end markets.
  • Chip design for any industry. Chip design is also on the rise outside of the semiconductor industry, as leaders crossing diverse vertical industries such as Facebook, Apple, Tesla, ABB and others, are investing in bringing their IC projects in house. But chip design is no small undertaking; it requires skilled engineers, experienced management, specialized tools and facilities, capital and the ability to scale, just to produce a relatively small volume of chips. With its unique combination of semiconductor expertise and extensive vertical experience, Capgemini is well positioned to help these companies design disruptive chips, dramatically reducing the capital expense of doing it themselves.

The combined engineering excellence in silicon design, platform engineering and product design from Aricent and Capgemini Engineering equips Capgemini to help companies in any vertical bring innovative silicon products to market. Through both M&A and a continued focus on evolving and growing with the industry, Capgemini will be looking to retain its status as the world’s number one semiconductor ER&D services provider.

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