Hewlett-Packard Integrated Circuits Business Division; CAD Technology Acquisition (B)

In 1989, Lance Mills, manager of Hewlett Packard’s Integrated Circuits Business Division (ICBD), was deciding what his division’s priorities should be and how to set staffing levels. He decided to partner with a single computer-aided-design (CAD) vendor to completely replace its internal CAD software. In 1990, HP signed an agreement with Mentor Graphics. Three years later, however, HP and Mentor Graphics cancelled their CAD technology exchange agreement and Mills again had to determine a new strategy for ICBD. He reflected on what had happened differently than he had anticipated four years ago and also took stock of current industry trends and CAD developments. Mills had to meet the challenge of 0.35 pm process technology and at the same time identify areas where HP could invest in CAD technology to achieve competitive advantage.