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Semiconductor R&D Spending to Hit Record-High $53.4 Billion in 2012
A dozen semiconductor companies spent more than $1.0 billion each on R&D in 2011 for the first time ever, based on the Mid-Year Update's analysis of data taken from IC Insights' Strategic Reviews online database of IC suppliers.
As shown in Figure 1, Intel's R&D expenditures accounted for 32% of the top-10 spending and about 17% of total R&D expenses at all semiconductor companies worldwide—counting integrated device manufacturers (IDMs), Fabless suppliers, and foundries. Intel's 27% increase in R&D expenditures was the largest among companies spending $1 billion or more on research and development last year. Fifth-ranked Qualcomm, the industry's largest fabless semiconductor supplier, increased its R&D spending by 25% in 2011, while silicon Foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) raised its amount 23%.
For more than three decades, R&D spending as a percentage of total semiconductor sales has zigzagged higher due to increasing costs in developing more complex IC designs and the creation of next-generation process technologies for large-diameter wafers (currently 300mm but heading toward 450mm later this decade). R&D spending as a percent of semiconductor sales by chip companies was typically 7-8% in the late 1970s and early 1980s. R&D-to-sales ratios grew to 10-12% of revenues by the early 1990s and then jumped to over 15% during the last decade, reaching a record 17.5% in 2008.
IC Insights' Mid-Year Update shows that U.S. companies accounted for 57% of worldwide semiconductor R&D spending in 2011, followed by suppliers based in Japan, 17%; Europe, 10%; Taiwan, 8%; South Korea, 7%; and mainland China, 1%. The analysis of expenditures from IC Insights' online Strategic Reviews database shows IDMs accounting for about 66% of R&D spending by semiconductor companies in 2011, while fabless suppliers represented 29%, and pure-play foundries made up the remaining 5% of the total.
It is worth noting that the world's largest IC foundry—TSMC—entered the top-10 R&D ranking in 2010 for the first time ever. In 2011, TSMC increased R&D spending by 23%, nearly double the 12% average growth recorded by the top 10 last year. With the influx of IDMs turning to foundry capacity and major fabless customers needing lead-edge CMOS processes, TSMC is spending more money on both new 300mm fabs and R&D. In July 2012, TSMC chief executive Morris Chang noted that his company's 2012 R&D budget is now double the amount spent in 2009 (which was $656 million), in addition to raising capital expenditures 13% to an all-time high of $8.25 billion compared to $7.33 billion in 2011. TSMC's R&D–to-sales ratio stood slightly above 8% in 1H12 versus 7.9% in 2011, 5.1% in 2005 and 3.1% in 2000.
Details of the 2012 McClean Report, table of contents and ordering information can be found on Electronics.ca Publications' web site.