Last Tuesday, National Instruments announced its intent to acquire the Israeli data analytics startup OptimalPlus for $365 million. The two companies share many of the same enterprise-level customers within the automotive, semiconductor, and electronics industries which is one of the reasons that I believe this acquisition makes a lot of sense. National Instruments is positioning this acquisition as another piece of the puzzle moving toward accelerating its growth and without getting into all the details, I see a lot of synergy. I believe this acquisition represents the next step in the company’s data strategy, where it can enable data monetization versus selling the equipment that captures the data. I am going to dig into why I think this acquisition is an excellent fit for both companies.
OptimalPlus is an AI-based big data analytics software company that addresses the semiconductor, electronics, and automotive industries. The company develops technologies to enhance several manufacturing metrics, including yield and efficiency, improving product quality and reliability, and provide full supply chain visibility. The company’s headquarters and R&D are based in Israel, and it has regional offices in Asia, Europe, and the United States. National Instruments will gain the entire staff of OptimalPlus, which includes 240 employees. The acquisition cost National Instruments $365 million, which will be paid for with a mixture of cash and debt and is set to finalize in early Q3 2020.
Shared complementary positions
National Instruments and OptimalPlus serve many of the same customers in the semiconductor, automotive, and electronics industries. For semiconductor manufacturing, NI test systems are a popular choice, while OptimalPlus is the leading supplier for semiconductor manufacturing data analytics. OptimalPlus’ automotive and electronics analytics business isn’t as large as their semiconductor business, but it will also merge well with NI test offerings in that segment. With the additional of OptimalPlus, National Instruments now can operate deeper within each of the shared verticals. Acquiring OptimalPlus was the next logical step for National Instruments in its data monetization strategy. The hope is to accelerate innovation and increase sales opportunities across all verticals.
Strengthening National Instruments enterprise value proposition
Historically, National Instruments has done a great job of manufacturing and distributing automated test equipment that is software-centric. What I mean by software-centric is that the software provides an intuitive experience that scales well in different hardware platforms with the same architecture. I’ll add it has an FPGA-based solution that takes programmability to a new level. This allows users to choose the instance within the platform that best fits their needs.
With the acquisition of OptimalPlus, NI can combine the strength of OptimalPlus’ enterprise-level analytics software with their hardware, which in turn will increase the value of data for testing and manufacturing. The real value add is the additional product insights that OptimalPlus’ software will add to National Instruments test data. This will give users the ability to improve efficiency, quality, and time to market.
Dan Glotter, OptimalPlus Founder and CEO, echoed the shared sentiment in this statement that was present in National Instruments press release, “It is evident we share the unique commitment to high-quality software tools and need for world-class customer experience. The acquisition by a technology leader like NI is a testament to the leading-edge innovation delivered by our R&D, Product and Data Science teams in Israel and to the great dedication and commitment of our employees across the world. Together with NI, we will provide enterprise-level analytics to enable customers to achieve their digital transformation objectives while expanding our customer reach.”
In my opinion, the acquisition of OptimalPlus will dramatically strengthen the National Instruments enterprise value proposition through its data analytics software. The acquisition is one where the customer reaps the benefits quickly.
Initially, this deal looks like a homerun for National Instruments especially when considering the highly complementary positions that both companies serve. NI owns the software-centric hardware for evaluating and collecting data while OptimalPlus brings deep experience in big data analytics that helps manufacturers put data into context in real-time to influence decisions.
I don’t see a scenario where companies won’t benefit from a single provider that owns the end to end hardware and software for evaluating yield, efficiency, and product quality. I will wait to provide a more in-depth analysis after the deal is final and the companies have full merged. To me, the roska re related to this acquisition being a new monetization method for NI and therefore I will be monitoring any key OptimalPlus staff defections.
In the meantime, congrats to National Instruments and of course OptimalPlus.