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Design role drives 'new Europe'

Posted: 16 Jun 2006 ?? ?Print Version ?Bookmark and Share

Keywords:Richard Wallace? electronics design?

Budapest's fortunes were once tethered to Eastern Bloc politics, but today this historic city on the Danube is riding a wave of economic expansion, fueled largely by the emergence of Hungary and neighboring countries as a hub for electronics design and development. Hungary's capital thus proved an emblematic venue for the recent International Electronics Forum.

As surely as free-market economics are transforming the countries of Central and Eastern Europe, the global semiconductor and electronics industry showed itself to have confidently broken loose from the homogeneous confines of the bygone PC bloc. The theme of the forum, sponsored by analysis firm Future Horizons, was the "creative imperative" that is "powering the third digital revolution."

"The fun is back," Future Horizons founder and CEO Malcolm Penn proclaimed in his opening remarks, citing a new, consumer-driven economic cycle for tech that is characterized by rapid product churn, a new round of jockeying for brand recognition, upheaval in distribution channels, increased pressure on margins, and unpredictable market cycles.

The extent to which those industry dynamics are reshaping this corner of the world, not inaccurately described at the conference as the new Europe, was made clear in discussions with local industry players.

The electronics sector is a key driver in the region's surging GDP stats, led by Hungary's 104.3 percent upturn in 2004 and the country's estimated 11.6 percent increase in industrial production from last year to 2006, according to Kalman Kovacs, Hungary's Minister of Informatics and Communications.

"As a member of the European Union, Hungary is committed to promoting key technologies in order to increase competitiveness and provide excellent services to citizens," Kovacs told his forum audience.

Increased attention

With a well-educated, technologically-astute work force, Hungary and its neighbors in the new Europe are attracting increasing attention from semiconductor and electronics multinationals looking to tap the region's potential as a design and development center. An estimated 14 percent of Hungary's workforce holds university degrees, with Poland, the Czech Republic and Slovenia weighing in at 11.7, 11.6 and 10.7 percent, respectively, according to Hanns Windele, VP for Europe at Mentor Graphics Corp. Windele also cited strong English language skills among the region's populace.

Labor costs for electronics engineers are another draw. Windele cited a $150,000 loaded-cost differential between an engineer hired in Silicon Valley and one hired in Hungary.

The stats have gotten the attention of a number of U.S.-based multinationals, among them Texas Instruments Inc. "One of the things we find is that Europe brings us the view of the system," said Doug Rasor, VP of worldwide strategic marketing for TI and a forum keynote speaker. With core development and design expertise in the telecommunications and automotive markets, Europe "is a great center of innovation," Rasor added.

TI is no stranger to overseas operations; it was the first semiconductor company to open a design and development center in India, having taken the leap more than two decades ago.

"We don't have a base in Eastern Europe yet, but we're looking," Rasor said.

One U.S. company that has moved aggressively to set up design and development centers in this region, and indeed across the continent, is Mentor Graphics. "We're in an open race to conquer Eastern Europe," said Carsten Elgert, Mentor's European marketing director. Hungary, Poland and Russia are potential R&D targets for Mentor, Elgert said.

The Mentor executive noted the rapid rise of "a self-sufficient local electronics industry" fueled by "design center spin-offs" from manufacturing centers in Hungary and throughout the region, and driven by Europe's strong base in automotive electronics.

Mentor's new bid for dominance is likewise centered on automotive electronics. The company has developed an extensive network of design and development centers across Europe and already derives 30 percent of its sales revenue from the European market, vs. 18 percent for Synopsys Inc. and 20 percent for Cadence Design Systems Inc. Mentor recently expanded its design center in Katowice, Poland, where it now employs more than 150 engineers engaged in the development of tools focused on high-speed interconnect and signal integrity.

Last May 2005, Mentor acquired Budapest-based Volcano Communications Technologies (VCT) AB, a supplier of automotive networking design tools targeted at embedded software and test. From a core group of five engineers who designed tools used by Volvo for its S80 Series, Mentor expects to expand the operation to "around 100 engineers" by next year, said VCT founder Antal Rajnak, who today is director of Mentor's automotive design tool center here.

As industry pundits debate how to resuscitate EDA industry growth, operations like Mentor's seem to hold promise for new and organic EDA revenue expansion. Behind that potential, Rajnak said during an EE Times visit to the Mentor facility, is a paradigm shift in the way automotive electronic systems are developed, designed and manufactured.

Some established companies, like Bosch, are still selling control units and supporting bottom-up design, Rajnak said, but "the system in which small 'feeder' companies handle automotive electronics design for Europe's leading car designers has come to an end." The complexity of the electronics hardware and software that go into today's advanced automobiles demands "top-down, system-level design," Rajnak said. Thus Europe's auto industry, like Japan's, is moving rapidly to "a holistic architectural approach."

Hungary and the rest of the region stand ready to support that new mind-set, Rajnak said, pointing to the strong regional base in technical education; the availability here of experienced, low-cost engineers; and a long history supplying Hungary's automotive manufacturing sector. Mentor has tapped those advantages in its drive to find new EDA growth opportunities, Rajnak said.

The PC era may have passed this region by, but design operations like Mentor's Budapest center are poised to claim a key role in the third digital revolution.

- Richard Wallace
EE Times

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