The R&D World Index (RDWI) for the week ending January 21, 2022, closed at 5,208.27 for the 25 companies in the RDWI. The Index was down -5.66% (or 312.43 basis points) from the week ending January 14, 2022. The stock of only one RDWI member gained value at 0.42% (AstraZeneca). The stock of 24 RDWI members lost value from -0.43% (Eli Lilly & Co.) to -18.02% (Ford Motor Co.). The main cause for the large stock drops this past week were noted by analysts as being due to rising bond rates and rising inflation rates.
RDW Index member General Motors, Detroit, announced last week that it was investing nearly $154 million in its Lockport, New York, Components plant to produce electric motor parts for its Ultium-based electric truck and SUV products. GM’s existing Lockport components facility is being renovated which will be followed by the installation of new machinery and equipment. About 230 new jobs will be added to the facility between 2023 and 2026. GM also announced in December the in-house addition of EV (electric vehicle) drive unit casting operations in its Bedford Casting plant in Indiana, along with deals for rare earth permanent magnets to be used in EV motors.
RDW Index member Intel, Santa Clara, California, announced last week that it plans to invest more than $20 billion for new semiconductor chips at two new sites outside of Columbus, Ohio. The new site is expected to grow to accommodate eight chip factories with eventual investment totaling more than $100 billion over the next ten years. Intel plans to fabricate its most sophisticated devices at the Ohio site with construction beginning in 2022 and chip production coming online in 2025. The company also pledged $100 million to develop partnerships with Ohio educational institutions to build a pipeline of talent and bolster research programs in the area. The Intel fabs will create more than 3,000 permanent jobs in Ohio and create an additional 7,000 construction jobs and thousands of support jobs, according to the company.
RDW Index member IBM, Armonk, New York, announced last week that it agreed to sell the data and analytical assets from its Watson Health business to investment firm Francisco Partners, San Francisco. The sale price was not noted, but analysts commented on a value of about $1 billion based on its current value. Francisco has previously invested in other healthcare companies, including GoodRx Holdings (Santa Monica, California), Zocdoc (New York City) and Capsule Corp. (New York City). IBM initially expected combine its artificial intelligence (AI) capabilities with its supercomputing business to create a state-of-the-art health organization based on large amounts of data from patient outcomes but only garnered limited success according to analysts.
RDW Index member Microsoft, Redmond, Washington, announced last week that it plans to buy Activision Blizzard, Santa Monica, California, for about $75 billion. The deal is meant to be a pathway for Microsoft to the metaverse (a future vision of the Internet – a digital form for work, play, shopping, sports, education and socializing in immersive virtual worlds). Activision would give Microsoft’s games metaverse features
Graphics processor (GPU) leader Nvidia, Santa Clara, California, last week was noted as expand its R&D efforts in Israel, already standing at more than 2,800 engineers. The company is looking to create a new design and engineering group in Israel to help design the next generation of Nvidia CPUs. The company sees Israel as being a large resource for semiconductor design. Nvidia purchased Israeli interconnect company Mellanox in 2020 for $6.9 billion and its founder, Michael Kagan, is now CTO at Nvidia. Nvidia is looking to get deeply involved in the data processing market, in addition to the video gaming business it currently dominates.
Research doctors at the University of Alabama at Birmingham announced last week that they had successfully implanted a pig kidney into a brain-dead human patient and saw it work for several days. This experimental surgery was performed last September and was only recently published in the American Journal of Transplantation. This builds on the successful implantation of a genetically modified pig heart at the University of Maryland, Baltimore in early January 2022. Pig kidneys were also implanted into brain-dead humans last year at New York University’s Langone Health Center.
A major change to the tax treatment of R&D investments took effect on January 1, 2022. The change is in the Tax Cuts and Jobs Act of 2017 (TCJA) which no longer allows companies to deduct their R&D expenditures in the year they’re occurring. Since January 1, 2022, the R&D expenses must now be amortized over five years. R&D will continue to be expensed in each company’s annual financial statements.
Researchers at the University of Washington’s Institute for Health Metrics and Evaluation, Seattle, last week predicted that the U.S. is close to the end of the COVID-19 pandemic and that in the future it will be treated similarly to a bad flu that will need to be managed. The Washington researchers expect that after the Omicron variant wave, there will be a period of low COVID-19 transmission. The researchers also stated that the omicron variant will likely infect 50% to 60% of the world’s population. Omicron is expected to be the dominant coronavirus strain going forward, which has proven to be less lethal than previous variants and this strain could die down in a period of weeks. In the end, COVID-19 will become endemic and will be dealt without government restrictions.
Chinese officials reported last week that their economy had expanded by 4% in the last three months of 2021, the slowest pace since the beginning of the COVID-19 pandemic in the second quarter of 2020. They noted that the country’s economy had expanded 8.1% in 2021 from a year earlier, but that that figure masks a significant loss of growth momentum. Chinese officials are now taking steps including the increasing of mortgage lending and decreasing interest rates to home buyers to support their economy. Analysts note that they are still concerned about China’s weak housing market, it’s fast-declining birth rate, a continuing monthly rise in jobless rates and widening Chinese social inequalities, all of which could undermine China’s goal of ensuring stable economic growth.
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 2019 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.