The R&D World Index (RDWI) for the week ending April 12, 2024, closed at 3,603.30 for the 25 companies in the RDWI. The Index was down -2.05% (or -75.52 basis points). Five RDWI members gained value last week from 0.93% (Toyota) to 4.11% (Apple). Twenty RDWI members lost value last week from -0.12% (Cisco) to -7.80% (Intel).

Unable to obtain leading-edge semiconductor manufacturing tools due to security concerns by global manufacturers, Huawei, Shenzhen, China, will develop its semiconductor fabrication equipment. Huawei is building a large R&D center near Shanghai to develop chipmaking tools that will be competitive with systems developed by ASML, Canon, and Nikon, according to a report in The Nikkei Asia publication last week. The R&D center will initially focus on developing lithography tools to manufacture chips with 28 nm (or better) features. ASML, Veldhoven, Netherlands, controls over 90% of the global lithography tools market. The Huawei center will be in the Shanghai Qingpu District, including facilities for its chip design unit and centers for wireless technologies and smartphones. Huawei plans to invest $1.7 billion to build the campus accommodating 35,000 employees.

Due to an overwhelming and unexpected demand for U.S. government funds from the CHIPS funding act, the U.S. Department of Commerce (DOC) temporarily halted its plans last week to provide financial support for semiconductor R&D facilities, according to the American Institute of Physics, College Park, Maryland. As a result, the DOC decided to support semiconductor R&D through different avenues. Specifically, the DOC will earmark $11 billion for R&D activities, separate from the facility incentive program. The DOC received more than 600 letters of interest and noted that most of these would not be able to receive funding. The DOC expects to invest about $28 billion of the program’s $39 billion in incentives for leading-edge chip manufacturing. But leading-edge companies have now requested more than $70 billion.

RDW Index member Google, Mountain View, California, announced last week that it is making more of its semiconductors that can handle everything from YouTube advertising to big data analyses as the company combats the rising costs of AI. The new chip, Axion, is like those commonly used in big data centers. This development will reduce Google’s reliance on outside vendors and make it competitive with Intel and Nvidia. Cloud competitors Amazon and Microsoft have also invested in developing chips as the AI demand increases for computing resources. Google’s development of tensor processing units (TPUs) is already credited with saving money on AI services. Since 2016, Google has worked closely with Broadcom, Palo Alto, California, producing AI-based hardware.

The Taiwan Semiconductor Manufacturing Company (TSMC), Hsinchu, Taiwan, announced last week that it is getting up to $6.6 billion from the U.S. government for a factory complex it is building in Phoenix. TSMC will invest more than $65 billion and add a third chip factory to the manufacturing complex it started building in 2021. TSMC also stated that it will make cutting-edge 2-nm chips at one of the Arizona factories. TSMC is the world’s largest contract chip maker. TSMC will get U.S. funding in stages as its projects reach negotiated milestones. The monies are also contingent on due diligence by the DOC, who is overseeing the grant under the 2022 Chips Act. No mention of the pause in funding noted earlier in this report was made in this announcement.

Tokyo Electron, a manufacturer of EUV (extreme ultraviolet) lithography equipment for making state-of-the-art GAA (gate all around) transistors, announced last week that it will ramp up its R&D investment to $10 billion by 2028, an 80% increase from the past five fiscal years. The company is actively engaged in joint efforts with its customers to develop the next four generations of chip devices, extending well into the 2030s. The company enjoys a 100% share of the EUV lithography marketplace and is positioned to develop generative AI, autonomous driving, and 6G products.

RDW Index member Alibaba, Hangzhou, China, announced last week that it has lowered prices on its core cloud products for international products. The company is looking to take advantage of the increasing market for AI computing and gain a cloud-computing competitive edge over Amazon and Microsoft. The company says it has trimmed prices across five categories by an average of 23% for customers using its data centers outside mainland China. The current cuts follow an average 20% decrease in prices for various products in late February for customers in China. The company says the current cuts are aligned with an AI-first strategy to make core computing resources accessible to a range of customers. Alibaba’s revenue growth from cloud services has slowed in recent quarters against competition from rivals Huawei Technologies and Tencent Holdings in its key market of China. Its cloud sales rose about 3% from a year earlier in the previous two quarters.

 

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), which 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.