The R&D World Index (RDWI) for the week ending September 20, 2024, closed at 4,006.95 for the 25 companies in the RDWI. The Index was up 2.11% (or 82.94 basis points). Twenty-one RDWI members gained value last week from 0.14% (Astra Zeneca PLC) to 11.09% (Intel). Four RDWI members lost value the previous week from -0.24% (Eli Lilly & Co.) to -0.82% (Johnson & Johnson).
This week’s R&D highlights include Lenovo producing AI servers in an Indian facility, Constellation Energy and Microsoft restarting an undamaged reactor at Three Mile Island, and the Fed lowering the prime interest rate. We also cover Meta and two dozen companies sending a letter to the EU asking it to ease restrictions so their organizations can benefit from AI, and Qualcomm is considering taking over Intel.
Electronics R&D:
Lenovo starts production of AI servers in India facility
Chinese electronics firm Lenovo, Beijing, China, announced last week that it has started production of (AI) servers at its Puducherry facility in India. The company also revealed that it has established a new infrastructure R&D lab in Bengaluru, India, now positioned as one of its four principal global R&D labs. The other three are in Beijing, Morrisville, North Carolina, and Taipei, Taiwan. The company’s Puducherry plant, operational since 2005, has also been upgraded to produce enterprise AI and graphics processing unit (GPU) servers to handle AI workloads. The Puducherry plant has a capacity of annually producing 50,000 enterprise AI rack servers and 2,400 high-end GPU units.
Constellation and Microsoft agree to restart Three Mile Island reactor
Middletown, Pennsylvania, Three Mile Island Nuclear power generating station
A deal between Constellation Energy, Baltimore, and RDW Index member Microsoft, Redmond, Washington, was announced last week involving restarting one undamaged nuclear reactor in Pennsylvania’s Three Mile Island complex. This reactor was considered too costly to operate and was closed in 2019. Microsoft signed a 20-year power purchase agreement with Constellation for the restarted reactor. Constellation expects to spend about $1.6 billion to restart the reactor by early 2028. Microsoft already purchases nuclear-powered electricity from Constellation in Virginia.
Meta Platforms and others send letter to EU regarding its technical regs
RDW Index member Meta Platforms, Menlo Park, California, and more than two dozen other companies sent a letter to the European Union (EU), Brussels, Belgium, last week stating that their organization risks missing out on the full benefits of AI because of the bloc’s technical regulations. The letter said that AI can boost productivity and expand their economies, but the EU might reap fewer rewards than other jurisdictions. The letter stated that Europe has become less competitive and innovative than other regions and now risks falling further behind in the AI era due to inconsistent regulatory decision-making.
Oracle partners with Amazon Web Service
RDW Index member Oracle, Austin, Texas, announced last week that it has partnered with Amazon Web Service (AWS), Amazon’s cloud unit. The company has now partnered with Microsoft and Google in cloud computing and is doing so by wielding its flagship database software that, for decades, has powered large business operations, transactions, and customer data. The major cloud providers — Microsoft’s Azure, Google Cloud, and AWS — continue to be used by Oracle customers.
Global R&D and economic trends:
Fed lowers prime interest rate by 0.5%
Last week, the Federal Reserve Bank lowered its prime interest rate by 0.5% to a range of 4.75% to 5.25%. This action was made following the recognition of a lower inflation rate and continued economic growth. The Bank of England (BOE) left its key interest rate unchanged following the Fed’s action, taking a more cautious approach in loosening the restraints it imposed to respond to inflation. Analysts expect the BOE to take some action over the next several months. The BOE said it is still concerned by the rapid pace at which service prices and wages are rising. The BOE also commented that it has ruled out a quick succession of more minor cuts (than the Fed’s larger-than-expected 0.5% cut) for now.</p>
Qualcomm considers takeover of rival Intel
Qualcomm, San Diego, was reported last week to be considering a takeover bid of electronics rival Intel, Santa Clara, California. Apollo Global Management, New York City, was also reportedly considering a $5 billion investment in Intel. Neither of these actions was confirmed, but they reflect the financial troubles surrounding Intel. Even then, a transaction of this size would surely attract anti-trust scrutiny. Intel currently has a market value exceeding $300 billion, while Qualcomm’s value is about $185 billion. Any acquisition would likely involve breaking up and selling Intel components to others. For its interests, Intel has announced several cost-saving measures, including pausing factory projects in Germany and Poland for two years and putting a manufacturing project in Malaysia on hold until demand picks back up. Intel also announced that it has reached a multibillion-dollar deal with Amazon Web Service (AWS), Amazon’s cloud-computing arm, to manufacture chips at Intel factories using advanced chip-making technologies, which is expected to go into production in 2025
Automotive R&D:
Lithium supply for EV batteries in large supply but demand is low
Global demand for lithium used in electric vehicle (EV) batteries has risen dramatically over the past several years. However, according to a report in the Wall Street Journal, the mineral supply has risen even faster. This supply ramp-up and slowing EV sales have pushed lithium prices down. As a result, lithium producers are recording slowing profits and even losses in some cases. Inventory of lithium carbonate (used to make EV batteries) in China is still at a historically high level, with more supply coming online soon, which will be about 57% higher than demand in 2025.
The R&D World Index
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies) and ICT (9 companies) who invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ. NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World.
| Company | Ticker | Exchange | 2020 R&D billions$ | 09/13/24 | 09/20/24 | 9/13/24 to 9/20/24 | 1/1/22 to 9/20/24 |
|---|---|---|---|---|---|---|---|
| Alphabet/Google | GOOGL | NASDAQ | 27.303 | 158.37 | 164.64 | 3.96% | 13.66% |
| Microsoft | MSFT | NASDAQ | 17.198 | 430.59 | 435.27 | 1.09% | 29.42% |
| Volkswagen AG | VWAGY | OTC | 17.259 | 10.17 | 10.69 | 5.11% | -63.39% |
| Apple | AAPL | NASDAQ | 18.667 | 222.50 | 228.20 | 2.56% | 28.51% |
| Facebook/Meta | META | NASDAQ | 13.874 | 524.62 | 561.35 | 7.00% | 66.89% |
| Intel | INTC | NASDAQ | 14.503 | 19.66 | 21.84 | 11.09% | -57.59% |
| Johnson & Johnson | JNJ | NYSE | 13.750 | 165.52 | 164.16 | -0.82% | -4.04% |
| Roche Holdings AG | RHHBY | OTC | 14.143 | 39.11 | 39.45 | 0.87% | -23.68% |
| Merck & Co. | MRK | NYSE | 11.381 | 115.86 | 117.17 | 1.13% | 52.88% |
| Novartis | NVS | NYSE | 9.387 | 115.66 | 115.94 | 0.24% | 32.55% |
| Toyota | TM | NYSE | 10.724 | 175.39 | 184.07 | 4.95% | -0.66% |
| Pfizer | PFE | NYSE | 8.336 | 29.27 | 29.42 | 0.51% | -50.18% |
| Alibaba | BABA | NYSE | 6.006 | 84.69 | 89.22 | 5.35% | -24.89% |
| GM | GM | NYSE | 6.727 | 46.30 | 48.88 | 5.57% | -16.63% |
| Honda | HMC | NYSE | 8.806 | 31.47 | 32.72 | 3.97% | 15.01% |
| Ford | F | NYSE | 9.340 | 10.69 | 10.88 | 1.78% | -47.62% |
| AbbVie | ABBV | NYSE | 13.949 | 194.21 | 193.47 | -0.38% | 42.89% |
| Sanofi SA | SNY | NYSE | 7.750 | 57.13 | 57.63 | 0.88% | 15.03% |
| Cisco | CSCO | NASDAQ | 6.331 | 49.80 | 51.97 | 4.36% | -17.99% |
| Bristol-Myers Squibb | BMY | NYSE | 7.130 | 49.13 | 49.41 | 0.57% | -20.75% |
| Astra Zeneca PLC | AZN | NYSE | 6.056 | 78.27 | 78.38 | 0.14% | 34.56% |
| IBM | IBM | NYSE | 5.368 | 214.79 | 217.70 | 1.35% | 62.88% |
| Oracle | ORCL | NYSE | 6.928 | 162.03 | 168.00 | 3.68% | 92.64% |
| Eli Lilly & Co. | LLY | NYSE | 8.606 | 923.71 | 921.49 | -0.24% | 233.61% |
| Stellantis NV | STLA | NYSE | 5.309 | 15.07 | 15.00 | -0.46% | -23.23% |
| Total | 269.522 | 3924.01 | 4006.95 | 2.11% | 42.10% | ||
| ICT | 115.6 | 1867.05 | 1938.19 | 3.81% | 33.73% | ||
| Automotive | 59.8 | 289.09 | 302.24 | 4.55% | -11.60% | ||
| Biopharmaceutical | 83.6 | 1767.87 | 1766.52 | -0.08% | 71.80% |
