Last week, Schneider Electric agreed to acquire US engineering software company PTC for USD 205 per share, valuing the equity at USD 22.6bn and implying an enterprise value of USD 23.7bn. At first glance, an electrical equipment company making its largest acquisition in software might look like yet another attempt to bolt AI into an established industrial business, but the strategic logic runs considerably deeper.
The deal is one of the clearest signals yet of where industrial technology is heading. Electrification, automation, software and AI are increasingly converging into a single stack, or put differently, industrial value is migrating from the box to the stack. Hardware leaders are buying software to own the data layer and the recurring revenue that sits on top of it, while the physical bottleneck, and with it most of the near-term pricing power, remains in hardware. Rather than dwell on the transaction itself, we want to use it as a lens on how the industry is likely to evolve.
Schneider Electric’s major software and digital acquisitions (USD bn)
Source: Schneider Electric, InterCapital Research
Values represent headline transaction/company valuations and may refer to equity value or enterprise value depending on transaction disclosure. AVEVA represents the implied value of 100% of the company, although Schneider Electric already owned c.59% prior to the 2022 transaction. OSIsoft was acquired by AVEVA while Schneider Electric was its majority shareholder. Invensys and Shelly Group include broader automation/IoT activities in addition to software.
PTC is not Schneider’s first move of this kind. Invensys and AVEVA brought process automation and software for running plants. Cognite, agreed in June, adds an industrial data and AI layer. Shelly, the Bulgarian smart-device maker, brings edge hardware into buildings and homes. PTC closes the loop at the start of the lifecycle: its Creo is used to design complex products, Windchill manages product lifecycle data, Codebeamer manages software and application development, while ServiceMax and Servigistics extend that information into maintenance and aftermarket operations. Across computer-aided design (CAD), product lifecycle management (PLM), application lifecycle management (ALM) and service lifecycle management (SLM), PTC essentially owns the digital record from the moment a product is designed, through how it is manufactured, to how it is operated and maintained.
Combined with Schneider’s existing electrical equipment, processes and energy data, the portfolio now spans everything from “design and build” to “operate and maintain”, creating a contextualized data foundation for industrial AI. The distinction matters as AI applied to an isolated sensor reading can tell an operator, for example, that a machine is overheating, but AI connected to engineering data, product configuration, operating history and maintenance records can begin to explain which configuration is overheating, why, what component is likely responsible and how similar assets have behaved.
From product design to industrial intelligence
Source: Schneider Electric, PTC, InterCapital Research
The parallels with Končar Group are hard to ignore, although its core business is materially different and much closer to grid infrastructure and heavy engineering. Schneider, by contrast, is heavily exposed to energy management, low- and medium-voltage electrical distribution, industrial automation, buildings and data centers, and is increasingly wrapped in a software layer. Still, the underlying industrial cycle is the same: electrification is driving demand for physical equipment in grids, factories and data centers, while digitalization is raising the value of the software attached to it.
Končar, too, has expanded its Digital segment through M&A in recent years – Adnet, Kreanca Sustavi, NEOS – adding capabilities in networking, computing systems, business applications, analytics and cloud platforms. Alongside these acquisitions, it has continued to develop proprietary solutions under the PROZA umbrella, including SCADA-based monitoring and control of energy infrastructure, power-grid system interoperability, urban infrastructure management and data center management. Smart grids are the future, and a fairly near one at that. Končar will not become a software-first company, but a stronger digital offering should let it capture more value around the physical equipment it already knows how to design and manufacture.
A stronger digital layer means more than incremental software revenue. It raises switching costs, deepens the customer relationship after equipment delivery, creates recurring maintenance and service opportunities, and differentiates equipment in a market where manufacturing capacity is expanding.
There is, however, a very physical constraint to this increasingly digital story – no amount of AI can manufacture a transformer without electrical steel and other key inputs. On 25 September, the European Commission imposed provisional safeguard measures on imports of grain-oriented electrical steel (GOES), combining tariff-rate quotas with price thresholds (EUR 2,800–3,400 per ton within quota and EUR 3,500 per ton outside it). The measures also cover laminations, cores and cores already incorporated into imported transformers.
Key transformer input prices (2020=100)
Source: T&D Europe, WB Commodity Markets, InterCapital Research
The Commission's investigation pointed to growing import pressure and global overcapacity, particularly from China. GOES was already subject to anti-dumping measures covering China, Japan, South Korea, Russia and the US, but the existing minimum import prices had become less effective as market prices moved above those thresholds. T&D Europe, the industry association, estimates a transfer of more than EUR 700m a year from EU transformer makers to just two domestic GOES producers, Thyssenkrupp Steel (Germany) and Stalprodukt (Poland).
For Končar, the effect cuts both ways. On the cost side, higher GOES prices will feed directly into transformer costs, and how much of that Končar can pass on depends on two factors: the share of its backlog covered by price-adjustment clauses, and the product mix. GOES accounts for roughly 10–30% of a transformer’s unit cost, and the share is higher in distribution transformers than in power transformers. On the competitive side, covering cores already built into imported transformers closes the most obvious loophole – importing finished units instead of steel – which gives EU-based manufacturers some protection. The near-term result is likely a higher cost floor for the whole European industry rather than a Končar-specific margin hit, with February 2027 now a dated catalyst worth tracking.
The bigger picture is that the industry’s two structural trends are playing out at the same time: the digital content of electrical equipment is rising, and so is the strategic importance of the physical supply chain behind it.