Cadence Acquires Hexagon’s D&E Unit for €2.7B to Enter Automotive

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Cadence Expands into Automotive with Hexagon’s D&E Unit

Cadence Design Systems has long been recognized as a leader in electronic design automation (EDA), specializing in chip design tools that power semiconductors across industries. However, as industries like automotive and aerospace move toward electrification, autonomy, and system-level integration, traditional chip design alone no longer defines the competitive edge. Companies increasingly require multiphysics simulation—covering structural, mechanical, thermal, and system behavior—to validate complex products before physical prototyping.

The Acquisition Move

In a strategic pivot, Cadence announced its plan to acquire Hexagon’s Design & Engineering (D&E) division, a global leader in structural mechanics, multibody dynamics, and engineering simulation software. The deal, valued at approximately €2.7 billion (USD 2.9 billion), is scheduled to close in Q1 2026, subject to regulatory approvals.

This acquisition marks Cadence’s first major expansion into mechanical and automotive simulation, aligning with a broader industry trend where chip, system, and mechanical design are converging under one digital workflow.

Why Hexagon’s D&E Unit?

Hexagon AB’s D&E business has been a strong player in simulation software, especially in industries such as:

Automotive: Working with OEMs like BMW and Volkswagen, providing tools for crash simulations, vehicle dynamics, and durability testing.
Aerospace & Defense: Supporting simulation of aircraft structures and multibody dynamics in mission-critical environments.
Industrial Machinery & Energy: Enabling predictive maintenance and structural reliability simulations.

By acquiring this unit, Cadence gains access to advanced CAE (computer-aided engineering) capabilities, complementing its existing strengths in EDA and system analysis.

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Strategic Rationale

Bridging Electronics & Mechanics:
Cadence’s customers increasingly need co-simulation of electronics and physical systems—for example, integrating battery management chips with vehicle structural models or combining radar chips with aerospace flight simulations.
System-Level Workflows:
The merger enables Cadence to deliver end-to-end workflows: from semiconductors → electronic systems → mechanical validation, reducing product development time and costs.
Automotive Market Entry:
Automotive OEMs like BMW and VW are pushing for more digital twin capabilities, where vehicle performance can be modeled virtually before physical testing. With this deal, Cadence positions itself as a critical technology partner in EVs, ADAS, and autonomous vehicles.
AI-Enhanced Simulation:
Both Cadence and Hexagon are investing in AI-driven simulation, where machine learning accelerates optimization cycles. The acquisition strengthens Cadence’s AI-driven EDA platform by extending it into mechanical simulation spaces.

Market Impact

For Automotive:
With vehicles becoming more like computers on wheels, integrating chip design with mechanical validation is key. This acquisition gives automakers a unified toolset for electronics, software, and structural simulation.
For Aerospace:
Aircraft manufacturers and defense contractors can use Cadence’s expanded platform for lightweight materials testing, aerodynamics, and integrated avionics simulation.
For Cadence:
The move diversifies its revenue beyond semiconductors, tapping into the $13B+ global CAE market, and strengthens competition with Ansys, Dassault Systèmes, and Siemens Digital Industries.

Timeline & Outlook

Announcement: September 2025
Regulatory Approvals: Ongoing (EU, US, APAC regions)
Expected Close: Q1 2026
Integration Plan: Hexagon’s D&E team will merge into Cadence’s System Design & Analysis (SDA) business unit, ensuring continuity for existing customers.

Challenges Ahead

Integration Complexity: Merging EDA and CAE cultures may pose operational challenges.
Competition: Siemens and Dassault already have strong multiphysics simulation ecosystems.
Customer Retention: Hexagon’s long-term customers will closely watch how Cadence manages licensing, pricing, and roadmap integration.

Key Takeaway

This acquisition underscores a critical industry shift: simulation is no longer optional but central to innovation. Cadence’s move into mechanical simulation reflects the convergence of electronics, mechanics, and AI-driven workflows, positioning it to serve the next generation of automotive and aerospace development.