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Chip R&D spending to hit record high

Posted: 06 Sep 2012     Print Version  Bookmark and Share

Keywords:R&D spending  integrated device manufacturers  fabless suppliers 

Spending on research and development by semiconductor companies worldwide is expected to grow 10 per cent in 2012 to a record-high Rs.2.92 lakh crore ($53.4 billion) compared to the current peak of Rs.2.66 lakh crore ($48.7 billion) set in 2011, according to the IC Insights.

The increase will lift R&D spending by chip companies to 16.2 per cent of total semiconductor sales in 2012, which are now forecast to rise 3 per cent to Rs.18.02 lakh crore ($329.8 billion) from revenues of Rs.17.56 lakh crore ($321.4 billion) in 2011.

A dozen semiconductor companies spent more than Rs.5,464.48 crore ($1.0 billion) each on R&D in 2011 for the first time ever. Intel's R&D expenditures accounted for 32 per cent of the top-10 spending and about 17 per cent of total R&D expenses at all semiconductor companies worldwide—counting integrated device manufacturers (IDMs), fabless suppliers, and foundries.

IC Insights

Intel's 27 per cent increase in R&D expenditures was the largest among companies spending Rs.5,464.48 crore ($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 per cent in 2011, while silicon foundry giant Taiwan Semiconductor Manufacturing Co. (TSMC) raised its amount 23 per cent.

According to IC Insights' report, U.S. companies accounted for 57 per cent of worldwide semiconductor R&D spending in 2011, followed by suppliers based in Japan (17 per cent); Europe (10 per cent); Taiwan (8 per cent); South Korea (7 per cent); and mainland China (1 per cent).

IDMs accounted for about 66 per cent of R&D spending by semiconductor companies in 2011, while fabless suppliers represented 29 per cent, and pure-play foundries made up the remaining 5 per cent 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 per cent, nearly double the 12 per cent 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 Rs.3,584.70 crore ($656 million)), in addition to raising capital expenditures 13 per cent to an all-time high of Rs.45,081.97 crore ($8.25 billion) compared to Rs.40,054.64 crore ($7.33 billion) in 2011. TSMC's R&D–to-sales ratio stood slightly above 8 per cent in 1H12 versus 7.9 per cent in 2011, 5.1per cent in 2005 and 3.1 per cent in 2000.

For more statistics and forecasts, click here.

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