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Semis market to spend $49.2B on R&D in '08

Posted: 14 Jul 2008     Print Version  Bookmark and Share

Keywords:semiconductor  global spending  IC products  R&D 

Global spending on semiconductor R&D grew 12 per cent in the Q1 08 to Rs.44,423.39 crore ($11.1 billion) compared to Rs.40,021.07 crore ($10.0 billion) in R&D expenditures during 1Q 07, according to market research group IC Insights, and will reach Rs.196,903.66 crore ($49.2 billion) for the whole of this year.

R&D spending as a percentage of semiconductor market sales stood at 17.5 per cent during the Q1, up from 16.4 per cent in the same quarter last year.

IC Insights suggests that last year, integrated device manufacturers (IDMs), fabless semiconductor companies, and pure-play wafer foundries spent a total of Rs.182,896.29 crore ($45.7 billion) on R&D and related engineering activities for new IC products.

With IC design costs exploding, R&D and engineering budgets have increased at a faster rate than the industry's sales growth since the early 1990s, according to the market researchers.

R&D and engineering expenditures increased at a compound average growth rate (CAGR) of 12.7 per cent between 1990 and 2007, while semiconductor sales grew at a CAGR of 9.9 per cent in the 17-year period.

Overall, IC Insights expects this trend to continue into the next decade, but R&D expenditures in 2008 are forecast to rise by just 8 per cent to Rs.196,903.66 crore ($49.2 billion) as some IC makers attempt to curb spending and transfer some development activities to third-party foundries.

In 1Q08, IDMs collectively spent 17.9 per cent of revenues on R&D and related engineering activities, while fabless semiconductor suppliers averaged 25.1 per cent of sales.

Meanwhile, suggests IC Insights, pure-play silicon foundries spent only 7.1 per cent of total sales on R&D and engineering expenditures in 1Q 08.

In terms of companies, and perhaps not surprisingly, Intel continues to lead the IC Insights rankings for 2007 spending on R&D, with Rs.23,212.22 crore ($5.8 billion), or 16.4 per cent as a percentage of sales, and representing 12.6 per cent of total industry R&D.

Second spot goes to Samsung, which, at Rs.17,209.06 crore ($4.3 billion), spent a higher 21.4 per cent on R&D last year as a percentage of sales.

The highest spender in terms of percentage of sales was fabless comms chip group Broadcom, which spent Rs.5,402.84 crore ($1.35 billion), or 35.9 per cent. Surprisingly, of the top 15 chipmakers surveyed, TI spent the lowest percentage, 16.2 per cent, or Rs.8,404.42 crore ($2.1 billion).

Of the European suppliers, STMicroelectronics was in sixth place, with R&D spend of Rs.7,203.79 crore ($1.8 billion), or 18.1 per cent of sales, and NXP was ninth, with Rs.5,402.84 crore ($1.35 billion), or 22.3 per cent of sales. Infineon, excluding Qimonda, was placed 12th by IC Insights, with R&D spend of Rs.4,282.25 crore ($1.07 billion), representing 18.6 per cent of sales.

- John Walko
EE Times Europe

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