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New investor, new opportunities

Jason Carlson

With the recent investment in the business by DBAG congatec is poised for strong growth in 2021, as CEO Jason Carlson explains to Neil Tyler.

congatec has developed a strong reputation, since it was set up in 2004, in developing Compute-on-Modules and has taken a leading role in the development of new standards – from COM Express to the very latest COM-HPC – establishing itself as the supplier of choice for embedded and edge computing technology.

Jason Carlson was appointed CEO in 2015 with a mandate to turn what was a well-established business operating in EMEA, into a global one. Five years on Carlson is able to point to a company that’s significantly expanded its presence both in the US and Asia and, with the recent investment in the company by Deutsche Beteiligungs AG (DBAG), that’s a trend he expects to continue.

“We’ve seen a strong internationalisation of the business and the expansion of congatec’s product range, which now includes computer modules for new processor types, will help drive future growth.

“The recent investment by DBAG has come at the right time for the company,” he says. “It’s going to help unlock a diverse range of new market opportunities, as well as bring considerable financing and M&A experience to the table. We are well positioned going forward."

Looking back on 2020 Carlson describes the year as being, “at best a challenging one.”

“Where we have been fortunate is that we address a diverse range of markets so a decline in industrial has been offset by growth in the medical sector. As a result, we’ve closed out the year flat to slightly up on 2019 which, considering the circumstances, should be viewed as a success.

“While the pandemic has seriously impacted certain markets, medical has performed well. But you need to ‘peel the onion’ and look a little deeper.

The medical market has been driven by demand for ventilators and if it’s not Covid-19 related, it’s been more of a struggle.”

Turning to actual design wins, Carlson says that 2020 has seen demand grow for next generation modules and the pandemic has given a strong boost to the Internet of Things and Industry 4.0. “If anything it’s been business as usual for us and there now seems to be more opportunities. While evaluations are taking a little longer as far as we are concerned, when it comes to design wins, it’s been a fantastic year.”

The company has also benefited from operating a diverse manufacturing base as well as maintaining shorter supply chains, avoiding some of the political and trade winds that have impacted other companies.

“Our experience over the past few years has cemented our belief that this model works. I don’t think we would have been able to put up the number we have this year if we had operated differently.”

Technology trends

Looking at how the demand for technology is changing Carlson points to the growing demand for edge computing and VR, that’s driving demand for higher levels of computing and more complex designs.

“We are seeing advanced CPUs that are able to deliver industrial embedded type reliability and the shift to more edge devices requires increased compute power to enable processing to be carried out locally, avoiding the latency and security issues that occur when you send data up to the cloud.”

He points to developments in video analytics, security and intelligent autonomous robots as examples.

“These are all highly complex devices that require much greater computing power and it’s this, along with increased levels of complexity, that is driving the need for new standards,” Carlson explains.

congatec has taken a leading role in developing standards, whether that’s COM Express or the new COM-HPC. “Whenever you are developing a new standard there will always be limiting factors to do with power, bandwidth and connectivity, but with our COM-HPC and COM Express solutions we’re able to offer a broad range of options for engineers looking to use the very latest processor technologies.”

The COM-HPC standard, for example, provides for a broad range of highspeed interfaces such as PCIe Gen 4 and USB4, a future proof high-speed connector, and a comprehensive feature set for remote management which is becoming increasingly important for emerging broadband connected edge applications – whether that’s dedicated edge devices or rugged edge clouds.

“COM-HPC is needed primarily to address new applications with particularly high performance requirements, such as those we’ve seen emerging with Server-on-Modules at the edge layer level, or those requiring very fast GPGPU connections for AI and machine learning,” adds Carlson.

The range of new applications is certainly huge. “Take robotics, for example. We’ve seen growth in unmanned or autonomous robots capable of navigating the last mile to make deliveries, or tasked with intelligently navigating through a shop or warehouse.

“There’s a whole new area around collaborative robots that are capable of working together or alongside human co-workers.”

According to Carlson, greater complexity and more computing power at the edge is driving the Compute-on-Module space but drill down into a sector and there will be specific issues to be addressed.

“In terms of industrial automation predictive maintenance is becoming more important. But here, you are looking at upgrading existing technology to use automation to make lines smarter and that takes time to implement. Drones, by contrast, are a new market. There is no existing infrastructure to upgrade, so it’s about the rules and regulations that you have to work with.”

DBAG investment

Carlson is optimistic about the company’s future and points to the recent investment made by DBAG which is, for him, a game changer.

“congatec is 16 years old and we have been supported by the same set of investors since our inception. So over the years our growth has been primarily organic.

“We operate in an embedded market that is highly fragmented. There are plenty of exciting small players out there that could provide us with opportunities to look at acquisitions. Everything we have done to date has been self-financing and that’s been challenging and in our history we’ve only bought one company – Real Time Systems.

“DBAG is a large publicly traded private equity firm with considerable financial resources, and that is going to open up new opportunities for congatec from an M&A point of view,” Carlson suggests.

“They have considerable expertise and have already invested in the embedded electronics sector. They have a portfolio of businesses across the German-speaking world with whom we can build new connections, co-sell and make introductions – it’s a great opportunity.”

But Carlson goes on to make the point that congatec needs to stay focused on what it does best – that’s developing world-leading Computeron-Modules - and to that end, “we most likely will do smaller deals going forward.”

He makes clear that, “Everything we do will be driven by the desire to increase the value proposition we are able to offer our customers.”

New standards, new products and now a new investor, congatec is certainly well positioned to exploit developments across the embedded space and deliver higher levels of performance.

Author
Neil Tyler

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