Tessolve, a semiconductor design firm owned by Hero Electronix, has made a significant move by acquiring Germany's Dream Chip Technologies for ₹400 crore ($47.5 million). This acquisition strengthens Tessolve's chip design capabilities, positioning it for a more competitive edge in the global market. The deal also opens up better access to the European market, where Tessolve already has a presence with over 30 employees, but the acquisition is expected to significantly expand that footprint.

Founded in 2004, Tessolve specializes in semiconductor design, testing, and production, serving 80% of the world’s top 20 semiconductor firms. With a steady 20% compound annual growth rate (CAGR), Tessolve has seen consistent revenue growth, surpassing ₹1,000 crore ($120 million) annually. The company has expanded its global operations with over 3,000 employees in 10 countries. The acquisition of Dream Chip is its sixth in the last decade, primarily aimed at enhancing its technical capabilities rather than maximizing revenue.

Dream Chip, a leader in system-on-chip (SoC) design, focuses on markets like artificial intelligence (AI), automotive, data centers, and industrial sectors. Dream Chip's CEO, Jens Benndorf, highlighted the company’s expertise in autonomous driving, a growing area in Germany, where it aims to accelerate innovation in the automotive industry. Despite the acquisition, Dream Chip will continue to operate under its own brand as part of Tessolve, leveraging Tessolve’s broader global platform and engineering bandwidth to tackle larger projects and extend its sales reach.

The acquisition will also boost Tessolve’s European operations, adding four new delivery locations in Germany and the Netherlands. As part of the integration, Tessolve is also exploring a strategic expansion in the semiconductor sector. The company is reportedly planning to raise ₹1,000-1,260 crore ($120-$150 million) by selling a 25-30% stake, which will help fund future acquisitions and expansion plans.

Tessolve’s CEO, Srini Chinamilli, emphasized that the acquisition aligns with the company’s strategy to become a leader in custom chip design, which is becoming increasingly important as more companies move toward bespoke semiconductor solutions. "The synergy brought by Dream Chip Technologies will enhance Tessolve’s capabilities, positioning us to meet the growing demands of the custom chip market," said Ujjwal Munjal, Chairman of Tessolve.

The Hero Group-owned company’s expansion plans are also in line with India’s booming semiconductor industry, which is expected to reach $80.3 billion by FY28, bolstered by the Indian government's India Semiconductor Mission (ISM). Recently, Tessolve opened labs in the U.S., Singapore, and India, and has plans to set up additional centers in tier-II cities in India.

Tessolve’s comprehensive solutions are helping semiconductor manufacturers accelerate time-to-market by eliminating the need for heavy investments in design, engineering, and testing of chips, used across various sectors including automotive, power management, AI applications, and electric vehicles. The company continues to drive growth as the global semiconductor market accelerates, with demand coming from both domestic and international markets.