‘R&D expenditure by chip manufacturers reached record high in 2020’
Chip manufacturers invested a record amount in research and development in 2020. This is according to a report by research agency IC Insights. Such spending rose five percent last year to $68.4 billion.
IC Insights predicts in its annual McClean Report that this increase in research and development spending will continue in the coming years. The research firm expects chip manufacturers to invest 4% more this year compared to 2020. This would bring total spending in 2021 to about $71.4 billion. On average, R&D spending by semiconductor manufacturers is expected to increase by 5.8 percent in the coming years, reaching a total of $89.3 billion by 2025.
In addition, it appears that companies seem to spend less on R&D in relation to their turnover. Total R&D expenditure of $68.4 billion was equivalent to 14.2 percent of global semiconductor sales. Since 2000, only five times since 2000, manufacturers have invested less than the historical average of 14.6 percent of total sales in R&D. This happened in 2000, 2010, 2017, 2018 and 2020. According to IC Insights, this is not because manufacturers are spending less, but precisely because turnover from chip production has risen sharply in recent years.
Image via IC Insights
Intel invested most in R&D, but lead is falling
According to the research firm, Intel spent the most in 2020 on research and development, investing a total of $12.9 billion. That accounted for 19 percent of all R&D expenditure among chip manufacturers. In previous years, Intel also led the way. A year ago, Intel’s investments still accounted for 22 percent of all R&D expenditure in the semiconductor sector. IC Insights reports that such Intel spending fell by four percent in 2020 compared to a year earlier. That is the company’s largest decline since the mid-1990s, according to the research firm.
Samsung is number two in R&D spending for its semiconductor division, with a total of $5.6 billion. The South Korean company increased its research budget by 19 percent during 2020, which, among other things, used its budget to develop its 5nm and smaller nodes. The company did so in hopes of competing with market leader TSMC, which in turn increased its spending on research and development by 24 percent to $3.7 billion.
The top ten R&D investors in 2020 were Intel, Samsung, Broadcom, Qualcomm, Nvidia, TSMC, MediaTek, Micron, SK Hynix, and AMD. In addition, Nvidia and MediaTek have risen one and two places respectively, to places five and seven. AMD currently ranks tenth in terms of R&D spending, while it was just outside the top ten last year; in 2019, that company was in eleventh place.