The R&D World Index (RDWI) for the week ending July 22, 2022, closed at 2,493.56 for the 25 companies in the RDWI. The Index was down -0.54% (or -13.46 basis points) from the week ending July 15, 2022. Thirteen of the 25 RDWI members gained value from 1.42% (Microsoft) to 7.91% (Ford Motor Co.). Thirteen of the 25 RDWI members lost value last week from -0.86% (Eli Lilly & Co.) to -8.34% (IBM).
Editor’s Note: The overall value of the RDWI saw a significant overall shift this week due to the 20 for 1 stock split of the Alphabet/Google stock after the close of business on July 15, 2022. The split was announced on February 1, 2022, and made to make the stock more affordable to more people. The stock originally closed on 7/15/22 at 2,235 and dominated the RDWI with about 48% of the overall RDWI value. With the stock split, that ratio has now shrunk to less than 5% of the overall RDW Index value, making the distribution more uniform among all 25 members.
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A report (the 2022 McClean Report) issued last week by IC Insights Inc., Scottsdale, Arizona, revealed that about 56% of the global semiconductor industry R&D spending in 2021 was by companies headquartered in the U.S. Semiconductor R&D expenditures by Asian-Pacific companies accounted for about 29% of that total. European R&D accounted for about 8% and Japanese R&D accounted for the remaining 7%. American R&D spending share has increased slightly from 55% in 2011. Worldwide, semiconductor companies spent about 13% of their combined sales on R&D in 2021 ($50.8 billion).
RDW Index member Pfizer, New York City, announced last week that the company is planning a $470 million expansion of its R&D facilities at Pearl River, New York. Pearl River is where much of the development of the company’s COVID-19 vaccine took place. The expansion will include a new vaccine R&D building as well as upgrades to its existing facilities. The 260,000-ft2 expansion includes 55,000-ft2 of laboratories. The expansion is expected to be completed by early 2026.
China announced last week that it’s centrally administered state-owned enterprises (SOEs) increased their investments in R&D in the first half of 2022 by about 19.7% to about $56.1 billion over the same period in 2021.
Samsung Electronics, Suwon, South Korea, announced last week that it plans to invest nearly $200 billion for the development and construction of 11 new semiconductor chip-making plants in Texas over the next 20 years. The plans were announced now to presage a 2022 year-end expiration of a Texas state incentive program offering property tax breaks for 10 years for large investments. Samsung currently operates three chip production facilities in South Korea, two in Austin, Texas, and two in China. The company is already developing a chip plant in Taylor, Texas, (near Austin) which it expects to become operational in the second half of 2024. Some of the new plants announced last week would be operational by about 2034 at the earliest, with the remainder coming online in the following decade.
RDW Index member Ford Motor Company, Dearborn, Michigan, announced last week that it plans to cut about 4,000 white collar jobs to begin its transition from combustion-powered vehicles to electric vehicles (EVs). The cuts would target engineering, marketing, sales and corporate functions. The cuts are part of the company’s plans to achieve a 10% pretax profit margin by 2026, up from 7.3% in 2021. In March, the company said it would divide itself into two divisions, one for EVs and other future technologies and the other to focus the traditional gasoline and diesel-engine side of the company. Ford also said that it has secured all the batteries it needs to manufacture 600,000 electric cars and trucks by the end of 2023. It also has secured sources for up to two million vehicles by the end of 2026.
Amazon.com, Seattle, announced last week that it plans to buy 1Life Healthcare Inc., San Francisco, for $3.9 billion which will provide the company with medical services that it can offer to a large pool of employers and individuals. The purchase provides Amazon with more than 180 medical offices in 25 U.S. markets along with a customer network of more than 8,000 companies. Amazon was expected to invest more than $56 billion in R&D in 2021, with a very hefty increase expected in 2022.
Semiconductor equipment manufacturer, ASML Holdings, Veldhoven, The Netherlands, expected a 35% increase in sales in 2Q 2022 to $5.5 billion, from a year earlier. This record increase was due to the long lead times for its advanced equipment and continued demand for automotive chips and high-performance computers. Taiwan Semiconductor Manufacturing Co. (TSMC), Samsung and Intel collaborated ten years ago to jointly invest in ASML to support development of its advanced extreme ultraviolet lithography system.
RDW Index member Johnson & Johnson, New Brunswick, New Jersey, announced last week a profit decline for the latest quarter and a forecast cut for full 2022 sales as a stronger U.S. dollar, macroeconomic pressures and the COVID-19 pandemic combined to lower overall sales. As a result, J&J is being more sensitive to discretionary spending, however, it still plans to fully support its R&D efforts and investments. Research and manufacturing budget cuts, however, were made citing a surplus of COVID-19 vaccine doses. Production of the J&J vaccine was briefly paused in 2021 for investigation of rare blood clotting conditions.
The $52 billion domestic semiconductor production support bill (USICA) was passed by the U.S. Senate last week This preliminary vote clears the way for a larger package that includes additional monies for scientific research.
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 Index.
