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Market research firm provides insights into chip companies' R&D spending |
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Jul 21, 2006 at 02:23 PM |
An analysis issued earlier this week by IC Insights details R&D spending by the leading fabless, foundry, and IDM chipmakers.
The market research company plucked the info from its Strategic Reviews Online database of company profiles (access to which is available when you pony up enough money).
The key finding is that spending on R&D among all semiconductor companies grew at an overall rate of 9% from 2001 to 2005. The fabless guys' R&D expenditures were nearly double that rate. Intel (surprise!) spent the most--26% of total--out of the top 25 IDMs during that span, coming in at $22.1 billion. The IDM group's R&D spending as a percentage of sales came in at 16%.
The top 30 fabless companies hit 17%, while three of the top four foundries--TSMC, UMC, and SMIC--finished in the high single digits, with only Chartered's 14% close to the norm for the IDMs. As IC Insights notes, foundries tend to spend less on R&D since they don't develop their own products.
I'd love to see a similar analyses of the semiconductor capital equipment and materials companies. In the meantime, I did a quick check of two of the big OEMs, Applied Materials and ASML, to see how they measured up.
In AMAT's case, for the second quarter of its fiscal year (reported in May), they put about 12.3% of company sales revenues into R&D (although they call it R&D&E--the "E" stands for "engineering"). The percentage of sales for R&D for the company's last fiscal year came in at about 13.5%.
In ASML's just announced second-quarter financials, the Dutch lithography toolmaker spent 9.8% of sales on R&D, a considerable drop from the 13.8% shown in its 2005 final tallies.
Then I wandered higher up the electronics foodchain to compare Microsoft. The house that Bill built spent nearly 14.9% of its sales revenues on R&D for the fiscal year just ended. For FY2005, the number was a bit higher--15.3%.
Finally, I sought out a couple of midlevel top-tier chipmakers who've come out with their financials this week--AMD and Freescale. La casa Ruiz put out a whopping 23% of company sales for R&D in its second quarter, a healthy pop from its 2005 annual rate of 19.6%.
As for Motorola spinoff Freescale, it showed almost 19% of sales going for R&D in its second quarter, which compared to 20.5% during its 2005 fiscal year. This dovetails nicely with the IC Insights info for the Freescalers--20% of sales spent on R&D over the five-year period analyzed.
Bottom line: R&D spending remains pretty healthy across the semiconductor spectrum. But the question remains as to whether it will be sufficient to meet the increasingly expensive demands of enhanced CMOS and post-CMOS research, development, and manufacturing.
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