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Silicon fabs target $49.2B for R&D

Posted: 14 Jul 2008 ?? ?Print Version ?Bookmark and Share

Keywords:semiconductor? wafer? silicon foundries? R&D?

Global spending on semiconductor R&D grew 12 percent in the Q1 08 to $11.1 billion compared to $10.0 billion in R&D expenditures during 1Q 07, according to market research group IC Insights, and will reach $49.2 billion until the end of this year .

R&D spending as a percentage of semiconductor market sales stood at 17.5 percent during the Q1, up from 16.4 percent in Q1 07.

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

Higher than sales growth
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 percent between 1990 and 2007, while semiconductor sales grew at a CAGR of 9.9 percent in the 17-year period.

Overall, IC Insights expects this trend to continue into the next decade, but R&D expenditures in 2008 are predicted to rise by just 8 percent to $49.2 billion as some IC makers attempt to curb spending and transfer some development activities to third-party foundries.

In Q1 08, IDMs collectively spent 17.9 percent of revenues on R&D and related engineering activities, while fabless semiconductor suppliers averaged 25.1 percent of sales.

Meanwhile, suggests IC Insights, pure-play silicon foundries spent only 7.1 percent of total sales on R&D and engineering expenditures in Q1 08.

R&D spending for '07
In terms of companies, and perhaps not surprisingly, Intel Corp. continues to lead the IC Insights rankings for 2007 spending on R&D, with $5.8 billion, or 16.4 percent as a percentage of sales, and representing 12.6 percent of total industry R&D.

Second is Samsung, which, at $4.3 billion, spent a higher 21.4 percent on R&D last year as a percentage of sales.

The highest spender in terms of percentage of sales was fabless communications chip group Broadcom Corp., which spent $1.35 billion or 35.9 percent. Surprisingly, of the top 15 chipmakers surveyed, Texas Instruments Inc. spent the lowest percentage, 16.2 percent or $2.1 billion.

Of the European suppliers, STMicroelectronics was in sixth place, with R&D spending of $1.8 billion or 18.1 percent of sales, and NXP Semiconductors was ninth, with $1.35 billion or 22.3 percent of sales. Infineon Technologies, excluding Qimonda AG, was placed 12th by IC Insights, with R&D spending of $1.07 billion, representing 18.6 percent of sales.

- John Walko
EE Times Europe

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