Major industrial automation platform companies are aggressively pouring cash secured on the back of the AI and data-centre boom into expanding their turf.

Schneider Electric, Siemens and ABB, all large industrial automation solution companies, have recently raised their earnings outlooks. Backed by rising share prices and solid finances, they are speeding up large-scale mergers and acquisitions.

The Financial Times (FT) recently reported that Schneider Electric and Siemens have been actively pursuing M&A of software companies.

Schneider Electric recently announced it will acquire U.S. engineering software company PTC in a $24 billion deal. It is the largest transaction between a European and a U.S. company since 2021, the FT said, citing Dealroom.

The acquisition will integrate PTC software that helps companies design, manufacture and maintain products with Schneider Electric’s power meters, cooling systems and control devices. Schneider CEO Olivier Blum (올리비에 블룸) stressed that the deal created a "complete software and AI powerhouse."

Schneider Electric also announced in July it would acquire industrial AI company Cognite for $3.1 billion.

Data centres account for about 10 billion euros of Schneider Electric’s revenue, roughly a quarter of its total. The company’s decision to raise its outlook again was also driven by a surge in demand from tech companies for data-centre solutions.

Siemens, Europe’s largest engineering company, began building its manufacturing software business in earnest by acquiring UGS for $3.5 billion about 20 years ago. Last year it bought Altair Engineering, which develops software for the automotive, aerospace and energy industries, for $10 billion.

Siemens and Schneider believe the synergy from combining equipment and data needed to run next-generation industrial production lines will be significant, the FT reported.

Analysts say the moves are part of an effort to seize the initiative in the still-early industrial AI arena. Industrial AI focuses on improving operational efficiency by using vast amounts of data generated in factories and production lines.

Switzerland-based ABB appears to be placing relatively more weight on investment in physical equipment. ABB bought UK industrial components maker Rotork for $5.5 billion in July. It is a different path from Schneider Electric, which is expanding into software.

ABB has about 2,000 in-house software engineers, but the acquisition shows a strategy of focusing on physical equipment needed for electrification and automation, the FT said.

ABB Chairman Peter Voser stressed that ABB is taking a different road from the two companies, highlighting that there is a big difference between Siemens and Schneider Electric in their M&A strategies. "We are not a company that buys software or AI companies," he added. "We will develop it ourselves from scratch."

Razpal, an analyst at AlphaValue, said, "ABB is more focused on equipment needed by utilities such as power and water, industrial companies, transport companies and data centres." He said this shows that if a company has a dominant market position, expensive software is not necessarily required to improve profitability.

The company said ABB technology is supplied to 1 out of 4 data centres. ABB’s data-centre-related revenue is about $3 billion, about 10 percent of total revenue.