The R&D World Index (RDWI) for the week ending May 5, 2023, closed at 2,681.86 for the 25 companies in the RDWI. The Index was up 1.12% (or 29.60 basis points). Fourteen of the 25 RDWI members gained value last week from 0.15% (Toyota) to 8.07% (Eli Lilly & Co.). Eleven of the 25 RDWI members lost value last week from -0.22% (Intel) to -16.33% (Volkswagen AG).

The World Health Organization (WHO), Geneva, Switzerland, declared an end to the COVID-19 emergency last week, signaling that the pandemic is receding as the disease that caused it becomes a routine illness, such as the annual influenza we now experience. The pandemic has been in a downward trend now for more than a year. People have built up an immunity to the virus, according to the WHO. Mortality has decreased and there is less strain on health systems. People are tired of public health measures, such as masks and public health organizations have lost staff due to burnout. According to the WHO, a new COVID-19 variant called XBB.1.16 recently drove a surge in inflections in India and is spreading in 30 other countries, including the U.S.

Major technology firms that include RDW Index members Alphabet/Google, IBM, Microsoft, Meta Platforms (Facebook), Amazon, and others are increasing the estimated useful life of their computational hardware (cloud servers, network equipment, and so on) from about four years to about six years, according to a report from research firm Omdia, London, U.K. This accounting change reflects the slower technological pace of semiconductor chips. Extending this equipment’s useful life helps preserve the companies’ cash flows and reduces their depreciation expenses. The changes in expenses for continuing operations for these large tech firms can be in the tens of millions of dollars, including income taxes.

RDW Index member General Motors, Detroit, announced last week that it had cut several hundred full-time contract positions primarily from its engineering hub (technical center) in Warren, Michigan. The eliminated positions were from GM’s large product-development operation, which employs about 20,000 engineers, designers, and other salaried workers dedicated to developing future vehicle models. About 5,000 salaried workers agreed to voluntary buyouts in April and 500 workers were cut in March. In January, GM outlined a plan to cut $2 billion in annualized expenses by the end of 2023.

RDW Index member Roche Holdings, Basel, Switzerland, announced last week that it had launched its Institute of Human Biology (IHB) which will focus on advancing research in the field of human model systems, such as organoids. Leveraging human model systems, the institute aims to accelerate drug discovery and development by improving the understanding of how organs function and how diseases develop. This is hoped to bring medicines to patients faster by enabling early testing of which drug candidates are safe and which molecules would work best for each patient. The IHB is expected to grow to about 250 scientists and bioengineers over the next four years. IHB will be located in Basel.

Analog Devices, Wilmington, Massachusetts, announced last week that it will invest $200 million in a new R&D facility as part of its expansion in the Philippines. The R&D facility will be a part of the firm’s LEED (Leadership in Energy and Environmental Design)-certified production facility at the Gateway Business Park in Cavite, the Philippines. The production facility will process 300-mm (12-in.) wafers in a Center of Excellence. The overall facility has 5,252 employees with a total of $400 million in exports for 2022.

Tractor maker Deere & Co., Moline, Illinois (dba John Deere) announced last week that it will use satellites to connect farms in remote areas of Brazil and the U.S. as the company rolls out high-tech machinery and software designed to sow and harvest crops more quickly and with fewer manpower requirements. The company is planning on generating 10% of its revenue by 2030 from software fees for using driverless tractors, smart crop sprayers, and other enhancements for its farm and construction equipment. In 2022, the company started using driverless tractors for plowing fields and sprayers that distinguish weeds from crops. The company is working to assemble a network of space-based satellites that will beam signals to farms in Brazil and isolated pockets of the U.S. without Wi-Fi.

RDW Index member Google/Alphabet, Mountain View, California, said last week that it is changing the way it presents search results by incorporating conversations with artificial intelligence (AI), along with more short video and social media posts. This is a change from the list of website results which has made it the dominant search engine for the past several decades. Google plans to make its search engine more “visual, snackable, personal and human.” The company plans to incorporate more human voices as part of the shift.

Companies developing the OpenAI ChatGPT applications are finding that they may need to navigate privacy and security questions about how the AI bot handles potentially sensitive data. To avoid these issues, some users are already deleting unsaved searches after 30 days. The European Union initially banned the use of ChatGPT tools citing violations of its regulations. However, those bans were rescinded last week when the EU regulators saw that OpenAI had implemented changes affecting the EU’s privacy and security concerns.

 

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