This character certainly appears to be a mechanically augmented Dutch from the film, or possibly a biologically augmented robot that looks like him.
The game features a character named Major Dutch Schaeffer who is a cyborg and bears a striking resemblance to the barrel-chested crew cut version of Arnold that we see in Predator.
According to Cracked, what happened next was the Aliens vs. Predator arcade game, which was actually one of the first pieces of media that combined those two franchises together.
The theory argues that CDS stands for Cyberdyne Systems.