Qualcomm Tops Fabless Semiconductor R&D Spend

Total R&D spending by semiconductor companies exceeded US$30 billion in 2005, an increase of nearly 10% from 2004 says a report from IC Insights. Overall, research and development spending by all semiconductor companies worldwide grew at an annual average rate of 9% between 2001 and 2005. The world's 30 largest fabless semiconductor suppliers increased their R&D expenditures at double that rate during the first half of this decade.

Among the top 25 integrated device manufacturers (IDMs), IC Insights' analysis showed Intel's R&D expenditures were $22.1 billion between 2001 and 2005, about $10 billion more than any other semiconductor company. Intel's R&D spending accounted for 26% of total R&D money spent by the top 25 IDMs that manufacture products and break out semiconductor financial results, along with research and development costs. While Intel's R&D expenditures dominated the semiconductor industry, the company's five-year average rate of spending, based on a percentage of sales, was just 14%. In the past five years, the top 25 IC manufacturers averaged 16% of sales for R&D expenditures. The R&D spending level for the top 30 fabless suppliers was 17% of sales based on the analysis from the Strategic Reviews Online database.

Five-year R&D spending among the top 30 fabless suppliers included:

• Qualcomm at $3.1 billion (15% of 5-year sales), 19% of group's total R&D spending;
• Broadcom at $2.4 billion (28% of sales), 15% of group total;
• Nvidia at $1.3 billion (14% of sales), 8% of group total;
• Xilinx at $1.3 billion (19% of sales), 8% of group total; and,
• Marvell at $1.0 billion (23% of sales), 6% of group total.

IC Insights' Strategic Reviews analysis also showed that silicon foundries consistently spend less of their sales on R&D compared to IDMs and major fabless customers. However, this is to be expected since foundries do not develop their own products. During the 2001-2005 period, foundry leader Taiwan Semiconductor Manufacturing Co. (TSMC) invested a total of $1.8 billion, or 6% of sales, on R&D. Among other top foundries, United Microelectronics Corp. (UMC) in Taiwan spent $1.1 billion in the past five years on R&D, or 9.0% of sales, while Semiconductor Manufacturing International Corp. (SMIC) in China paid out just $236 million, or 9% of sales, and Chartered Semiconductor Manufacturing Ltd. in Singapore invested $539 million in R&D, or 14% of sales, between 2001 and 2005."

Posted to the site on 19th July 2006