The R&D World Index (RDWI) for the week ending March 8, 2024, closed at 3,620.04 for the 25 companies in the RDWI. The Index was down -0.65% (or 23.70 basis points).
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Ten RDWI members gained value last week from 0.41% (Intel) to 5.70% (Bristol-Myers Squibb). Fifteen RDWI members lost value last week from -0.03% (AbbVie) to -4.97% (Apple).
China’s Ministry of Science and Technology (MST) last week announced that its investment in R&D rose 8.1% in 2023 to more than $458 billion. Nearly a million new technology contracts were signed in China in 2023, and the number of authorized invention patents reached 921.000, up 15.3% over the number of patents authorized in 2022. The MST said it will continue to increase its investments in R&D, including basic research to strengthen the power of its national strategy and leverage the advantages of its national laboratories and scientific research institutes. Youth talent training in science and technology is being emphasized as a long-term strategy with government assistance being increased for young researchers. Over half of researchers under 35 are funded by the government.
In a separate announcement, China said it was increasing its military spending by 7.2% in 2024, over what it spent in 2023. The increases will cover a broad area of new weaponry and cyber capabilities. Total Chinese military spending will reach about $232 billion following a GDP increase of about 5% in inflation-adjusted terms.
RDW Index member AstraZeneca, Cambridge, United Kingdom (U.K.), announced last week that it will invest about $827 million to increase its presence in the U.K., including a new R&D facility expanding its vaccine manufacturing capabilities. More than two-thirds of these monies will be used to construct a new facility for the R&D of new vaccines in Speke, Liverpool. This new campus will be operationally net zero and draw power from renewable sources. The facility will help produce vaccines for the company’s global child vaccination program. Partnering with the U.K.’s Health Security Agency, the company wants to advance science in developing and evaluating vaccines, boosting the U.K.’s resilience against future pandemics.
RDW Index member Apple, Cupertino, California, was noted as now playing a technology catch-up game with the likes of chipmaker Nvidia, Santa Clara, California, in generative AI. Apple recently announced that it was quitting the development of its electric vehicle (EV), code-named Project Titan, and is shifting the focus of that research to generative AI. But that change will not be easy, with AI competitors already investing large sums of money and resources. The central processing units (CPUs) powering generative AI services are expensive and difficult to come by currently, given the soaring demand. Apple’s current capital expenditure of about $10 billion is also less than a third of that spent by Alphabet/Google and Meta Platforms, according to S&P Global Market Intelligence, New York City. According to analysts, Apple may add AI processors to its cell phones, which could stimulate incremental upgrades, partly due to weak demand over the last two iPhone cycles.
The U.K.’s Science Ministry, London, and the Saudi Arabia Ministry of Communications and Information Technology, Riyadh, jointly announced last week that the two countries have signed a Memorandum of Understanding (MoU) to strengthen research and innovation and facilitate scientific and technological breakthroughs. The collaboration will focus on food security, advancing clean energy, and building connections in their business R&D sectors. Saudi Arabia is looking to diversify its economy with this collaboration, offering expertise in health, climate change, space exploration, and other areas. The countries have already committed more than $2 billion to clean energy and decarbonization technologies.
Europe’s new Digital Markets Act went into effect last week and looks to impact U.S. firms including Apple, Google, and other operators of digital platforms to allow third-party app stores and alternative payment options on those platforms. In January, Apple announced a series of changes to its App Store to comply with the new rules, but even this is sparking controversies with longtime Apple nemesis Epic Games. The new rules are unlikely to kill Apple’s App Store business, but it is another concern for the company.
Perplexity AI, San Francisco, is a new search interface that directly answers questions using OpenAI GPT 3.5 and Microsoft Bing. The company is looking to challenge Google’s web search dominance and stated last week that it is finalizing a $1 billion line of funding. The software uses advanced AI models to provide direct answers as opposed to a list of website links. Microsoft struggled in the past to dislodge Google with its new version of Bing, powered by large language models. Google has also struggled with generative AI, further emboldening potential competitors. Perplexity is starting to use GPT-4, OpenAI’s most advanced model.
Last week, RDW Index member Toyota announced plans to establish an advanced energy storage solutions development, prototyping, and test center in Henrietta, New York. The R&D center will collaborate with Rochester, New York, area energy storage resources to further support its own and Toyota Industries’ advanced energy solutions technology efforts, including lithium-ion batteries and fuel cells. Empire State Development is assisting the company with the project by providing funding through the performance-based Excelsior Jobs Tax Credit program. Monroe County Industrial Development Agency and Greater Rochester Enterprise are also providing funding.
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) that invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spending 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 Index.
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