The R&D World Index (RDWI) for the week ending July 29, 2022, closed at 2,520.43 for the 25 companies in the RDWI. The Index was up 1.08% (or 26.87 basis points) from the week ending July 22, 2022. Sixteen of the 25 RDWI members gained value from 0.29% (Eli Lilly & Co.) to 14.59% (Ford Motor Co.). Nine of the 25 RDWI members lost value last week from -0.05% (Novartis) to -11.17% (Alibaba).
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Advanced Micro Devices (AMD), Santa Clara, California, announced last week that it was building a new CPU (central processing unit) R&D facility in Poughkeepsie, New York. The company plans to hire verification engineers, CPU core performance architects and senior infinity fabric verification engineers. AMD increased its R&D budget from $1 billion to $2.8 billion in 2021 with overall revenues increasing by about 70% during this period.
Cosmetics R&D company Kolmar Korea, Sejong City, South Korea, announced last week that it plans to open a new North American headquarters site at Glenpointe Center West in Teaneck, New Jersey. The company focuses on cosmetics, pharmaceuticals and health-functional foods with other locations in South Korea, China, Canada and the US. The new 16,000-ft2 R&D facility is located in the metropolitan New York City area.
The U.S. House of Representatives and the Senate passed the $280 billion bill last week which includes the $52.7 billion Chips and Science Act aimed at the construction and expansion of semiconductor manufacturing facilities in the U.S. The bill went to President Biden who is expected to sign it. The bill contains a new $20 billion directorate which would be managed by the National Science Foundation (NSF). This directorate is aimed at accelerating the development of technologies critical to U.S. security, including artificial intelligence (AI), quantum computing and wireless computing.
As expected, the U.S. federal reserve system unanimously agreed last week to raise short-term interest rates by another 0.75% to a range between 2.25% and 2.50%. The primary focus of this rate increase is to combat U.S. inflation which rose to a 40-year high of 9.1% in June. The fed stated that further belt tightening may be necessary. According to the U.S. Department of Commerce last week, the U.S. economy shrank for a second quarter in a row falling to 0.9% in 2Q. The International Monetary Fund (IMF), Washington, D.C., also last week lowered its outlook for global economic growth for 2022 to 3.2% and 2.9% in 2023, compared to the 6.1% expansion seen in 2021. This is the IMF’s fourth outlook drop since October 2021.
Investors, including those at Morgan Stanley, New York City, are now being quoted as stating that the federal reserve will increase interest rates through the end of 2022 to possibly as much as 3.3%, but will start reducing them by mid-2023 as it tries to reverse recession-effects caused by the rate increases. Fed officials state that interest rates could rise to as much as 3.8% by mid-2023, and then ultimately settle at about 2.5%.
RDW Index member, Microsoft, Redmond, Washington, announced last week that it is talking to other cloud-computing providers, including Alphabet/Google and Oracle, to press the U.S. government into spreading its cloud services more widely, rather than investing large amounts into market leader Amazon.com. Microsoft has issued talking points to the other suppliers aimed at lobbying the U.S. government to require more contracts to be spread out to more than one company. Microsoft has also approached Vmware Inc., Dell Technologies, IBM, and Hewlett-Packard Enterprise to join the loose alliance. Amazon Web Services (AWS) has about a 39% market share for cloud applications.
The U.S. Department of Energy (DOE) last week said it would lend RDW Index member General Motors, Detroit, $2.5 billion for a joint venture in the construction of three battery-cell factories — in Michigan, Ohio and Tennessee. The DOE said the conditional loan would be made to Ultium Cells LLC, a joint venture between GM and South Korean battery company LG Energy Solution. The GM-LG’s first battery factory is set to begin producing battery cells by late-summer 2022. The Tennessee plant will start up in 2023 and the Michigan plant will start up in 2024. The full cost of all three plants is estimated at about $7 billion for GM and LG. The DOE has funded about $8 billion in similar loans to Ford Motor Co., Nissan Motor Co. and Tesla since 2010.
Redwood Materials, Carson City, Nevada, announced last week that it plans to invest $3.5 billion in an automotive battery materials factory in northwest Nevada. The plant, currently under construction outside Reno, Nevada, is expected to be one of the first U.S. factories to produce key ingredients needed to make electric vehicle (EV)-based batteries. Redwood is run by former Tesla executives. The company expects to start delivering cathode materials by late-2024.
Eutelstat Communications SA, Paris, agreed last week to acquire the U.K.-based OneWeb Global Ltd., in a $3.4 billion deal that would combine the two companies’ separate fleets of internet-delivering satellites and thus create a larger competitor to Elon Musk’s Starlink service. Eutelstat previously had a 24% stake in OneWeb. The U.K. owns 19% of OneWeb, which will fall to 11%, but retain a special share that provides the U.K. with certain national security assurances. Eutelstat currently has 36 geostationary satellites, while OneWeb has 426 low-earth-orbit (LEO) satellites. The geostationary satellites provide high capacity while the LEO satellites provide quick connectivity.
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.
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