The R&D World Index (RDWI) for the week ending December 9, 2022, closed at 2,425.43 for the 25 companies in the RDWI. The Index was down -2.63% (or 65.57 basis points) from the week ending December 2, 2022. Four of the 25 RDWI members gained value during the past week from 1.07% (Novartis) to 1.59% (Pfizer). Twenty-one of the 25 RDWI members lost value last week from -0.37% (AbbVie) to -7.58% (Alphabet/Google).
The world’s largest semiconductor manufacturer, TSMC (Taiwan Semiconductor Manufacturing Company), Hsinchu, Taiwan, announced last week that it will build a second semiconductor factory in Arizona, bringing its planned investment there to $40 billion. The first plant announced in 2020 is expected to start mass production in 2024. The second factory will make chips with 3-nm technology, currently the fastest available. The company also announced that it will upgrade the first plant to make 4-nm chips. The aggregate 600,000 wafers/year capacity will double the company’s original planned capacity in the state and triple its new factory investment in the U.S. The Arizona plants’ production by 2026 will still only account for about 3% of TSMC’s global capacity. Apple, AMD (Advanced Micro Devices), and NVIDIA are all expected to be customers of TSMC’s Arizona production.
The Warren, Ohio, battery plant co-owned by RDW Index member General Motors, Detroit, and LG Energy Solutions, Seoul, South Korea, announced last week that the workers at the plant voted overwhelmingly to join the United Auto Workers (UAW), Detroit. The plant produces Ultium Cells used in GM electric vehicles. (EVs). This result is likely to affect three other planned GM-LG factories as well as several more planned by battery companies partnering with RDW Index members Ford Motor Co. and Stellantis. The GM-LG venture is developing another battery plant in Tennessee, set to open in 2023 and another in Michigan, set to open in 2024. The UAW has failed to convince battery plant workers at Tesla, Rivian, and Nissan to join the union.
Air Products and Chemicals, Inc., Lehigh, Pennsylvania, and AES Inc., Arlington, Virginia, announced last week that they plan to build a $4 billion renewable-powered hydrogen factory in Northern Texas. The factory is scheduled to start operations in 2027 on the site of a retired coal plant. It will use solar and wind power to manufacture more than 73,000 metric tons of hydrogen annually. The costs of producing this hydrogen are higher than that for other fossil fuels when storage and transportation costs are included. Federal rebates will help offset these cost differentials and costs should continue to decline as new technologies are developed.
Exxon Mobil Corp., Spring, Texas, announced last week that it plans to maintain its spending plans for the next five years. Exxon invests about $1.1 billion in R&D each year. The company’s investment in fossil fuel production is expected to be steady at $20 to $25 billion annually over the next five years. Analysts say there is little incentive to increase investments in production or expansion of fuel-making facilities.
RDW Index member Apple Inc., Cupertino, California, announced last week that it is planning to significantly expand its data encryption services. The expanded end-to-end encryption system called Advanced Data Protection would keep most data secure that is stored in iCloud, an Apple service used by many Apple users for their iPhones. The data would be protected in the event Apple is hacked and would not be accessible to law enforcement, even with a warrant.
J.M Smucker Co., Orville, Ohio, announced last week that it will build a new 29,000-ft2 R&D facility to test innovation concepts and new manufacturing productivity efforts. The new facility will be built on the campus of its headquarters facilities and will support its popular Uncrustables brand. The new R&D facility is scheduled to open in late 2023. The company will receive support from the State of Ohio in conjunction with its new R&D center development.
The U.S. federal reserve system is likely to raise short-term interest rates at its regularly scheduled meeting this week by about 0.5% according to analysts, which is down from its four consecutive 0.75% rate increases. Smaller rate increases on the order of 0.25% are expected to be announced in early 2023.
Novo Nordisk, Bagsvaerd, Denmark, announced last week that it had underestimated how big the demand for its obesity drug, Wegovy, would be and was not ready to manufacture enough to fill prescriptions after the drug was approved last year by the U.S. Food and Drug Administration (FDA). Complicating matters occurred when a contract manufacturer halted production to address inspection issues. RDW index member Eli Lilly & Co, Indianapolis, is expected to launch a competitive obesity drug, Mounaro, in late 2023 or early 2024.
The FDA last week extended the authorization of the new COVID-19 boosters to children as young as 6 months. Children from 6 months to 5 years can now get the updated boosters (from Pfizer and Moderna) which target two Omicron offshoots as well as the original strain of the coronavirus.
A quarterly survey of more than 1,000 U.S. car dealers conducted in late October by Cox Automotive revealed that their outlook for car sales is the gloomiest it has been since the research firm first began the poll in early 2017. There has been pent-up demand for people unable to find specific cars but analysts state that those figures will dry up in early 2023. Most car dealers now view the sales market as very weak. Rising interest rates will also be a deflator to sales demand.
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 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 Index.