The R&D World Index (RDWI) for the week ending October 11, 2024, closed at 4.049.72 for the 25 companies in the RDWI. The Index was up 1.11% (or 44.32 basis points). Fourteen RDWI members gained value last week from 0.06% (Microsoft) to 5.06% (Eli Lilly & Co.). Eleven RDWI members lost value last week from -0.04% (Merck & Co.) to -3.83% (Alibaba).
This week’s R&D highlights include Samsung’s trailing in high-bandwidth AI memory chips, Boeing’s reduction of workforce, OSTP’s concerns about the current state of R&D funding, and the Justice Department breaking up Google’s search monopoly.
AI R&D:
Samsung – David Lloyd-7769.jpg
Samsung trails in high-bandwidth memory chips for AI
Samsung Electronics, Suwon, South Korea, is the world’s largest memory chip manufacturer; however, it was reported last week that it trails Taiwan Semiconductor Manufacturing Company (TSMC), Hsinchu, Taiwan, and SK Hynix, Icheon, South Korea, in the manufacture of high-bandwidth memory chips used in artificial intelligence (AI) computing systems. Samsung admitted last week that it is failing to meet expectations. SK Hynix is now the leading supplier of high-bandwidth memory chips to Nvidia, Santa Clara, California, the powerhouse leader of AI systems. Samsung announced in 2019 that it planned to become the leader in memory chips and the logic chip foundry businesses. However, since then, the gap between TSMC and Samsung has only widened, and Samsung’s share of the memory market has dropped from 16% to 10%. As part of its cost-saving measures, The company has delayed installing new equipment at its facilities in Pyeongtaek, South Korea, and Taylor, Texas.
OpenAI to open Singapore office
AI developer OpenAI, San Francisco, announced last week that it plans to open a Singapore office later this year to serve as an Asia-Pacific hub to grow its regional presence. OpenAI opened a Tokyo office earlier this year and plans to recruit local talent in AI technologies. According to OpenAI, Singapore has emerged as a leader in AI, and it is excited to partner with the government and the country’s thriving AI ecosystem. The company expects to hire five to 10 roles by year’s end to support its technical, global affairs, operations, and communications needs.
Economics and R&D funding
Boeing announces workforce reduction
Last week, Boeing, Crystal City, Virginia, announced that it will reduce its workforce by 10% or roughly 17,000 workers. These reductions, combined with the furloughing of thousands of white-collar workers announced in September, will have a negative effect on the company’s R&D work. However, no specific details in this area were announced. The company also stated it was delaying the launch of its new 777X airplane to at least 2026 and the discontinuance of several other programs. Boeing has 480 unfilled orders for the 777X aircraft. It also has an ongoing factory machinist strike, which has stopped aircraft production.
White House releases Quadrennial Science and Technology Review Report
The White House’s Quadrennial Science and Technology Review Report was released last week, noting that federal agencies are working to manage current funding for federally funded R&D, but the administration is in a position where it must continue advocating for robust funding levels. Office of Science and Technology Policy (OSTP) Director Arati Prabhakar noted in the report that she is concerned about the current state of funding for federal R&D and its infrastructure and impact on global competition for the nation. The director said the government must fix some issues to ensure we have the necessary facilities and infrastructure. Federal R&D must apply AI for public missions according to the report which details how AI will deliver critical government services, develop new medicines, and provide weather forecasts that save lives.
Apple opens largest overseas research lab in China
RDW Index member Apple, Cupertino, California, announced last week that it has opened its largest research laboratory outside of the U.S. at the Shenzhen Park in Hetao, China. The new facility spans 20,000 m2 and is the focal area for Apple’s R&D hub in the Greater Bay Area covering Guangdong, Hong Kong, and Macao. This facility is expected to significantly boost Apple’s research and testing capabilities for iPhone, iPad, and Vision Pro mixed reality headsets. The facility is expected to employ about 1,000 domestic and international experts. Apple recently also announced that it has built research centers in Beijing, Shanghai, Suzhou, and Shenzhen, doubling its development team over the past five years.
Automotive R&D:
Garrett Motion establishes zero-emission innovation center in China
Automotive supplier Garrett Motion Inc., Rolle, Switzerland, announced last week the establishment of a new zero-emission innovation center in Wuhan, China. The center will focus on high-speed E-powertrain systems, fuel-cell compressors, and electric vehicle cooling solutions. It will feature state-of-the-art R&D labs, a prototype development workshop, and offices with advanced testing capabilities.
Legal and market developments
U.S. Justice Department to file antitrust options against Google
It was noted last week that the U.S. Justice Department is expected to submit a filing this week that presents a federal court with a range of potential anti-trust options, from direct restrictions to a breakup of RDW Index member Google, Mountain View, California. The actions aim to end what a judge said was Google’s unlawful monopoly in computer-based searches. A U.S. District judge found that Google ingrained its monopoly by paying billions of dollars to operators of web browsers and phone manufacturers to be their default search engine. Google also faces the threat of a separate government lawsuit targeting its online advertising business. U.S. anti-trust enforcers have not broken up a company in the past 40 years.
Google’s search dominance challenged by AI startup
Google’s grip on the search business is loosening, according to media reports last week. Perplexity, an AI search startup backed by Amazon’s Jeff Bezos, plans to introduce ads this month under its AI-generated answers. Until now, it has generated revenue mostly from a $20 monthly subscription offering that grants access to more powerful AI technologies. These new technologies add to the pressure on Google from the rise of Amazon.com, which has taken a chunk of search ad spending. Many consumers begin product searching on the e-commerce platform.
The R&D World Index
R&D World’s R&D Index is a weekly stock market summary of the top international companies involved in R&D. The top 25 industrial R&D spenders in 2020 were selected based on the latest listings from Schonfeld & Associates’ June 2020 R&D Ratios & Budgets. These 25 companies include pharmaceutical (10 companies), automotive (6 companies), and ICT (9 companies), which invested a cumulative total of nearly 260 billion dollars in R&D in 2019, or approximately 10% of all the R&D spent in the world by government, industries, and academia combined, according to R&D World’s 2021 Global R&D Funding Forecast. The stock prices used in the R&D World Index are tabulated from NASDAQ, NYSE, and OTC common stock prices for the companies selected at the close of stock trading business on the Friday preceding the online publication of the R&D World Index.
| Company | Ticker | Exchange | 2020 R&D billion$ | 10/04/24 | 10/11/24 | 10/04/24 to 10/11/24 | 1/1/22 to 10/11/24 |
|---|---|---|---|---|---|---|---|
| Alphabet/Google | GOOGL | NASDAQ | 27.303 | 168.56 | 164.52 | -2.40% | 13.58% |
| Microsoft | MSFT | NASDAQ | 17.198 | 416.06 | 416.32 | 0.06% | 23.79% |
| Volkswagen AG | VWAGY | OTC | 17.259 | 10.78 | 10.54 | -2.23% | -63.90% |
| Apple | AAPL | NASDAQ | 18.667 | 226.80 | 227.55 | 0.33% | 26.15% |
| Facebook/Meta | META | NASDAQ | 13.874 | 595.94 | 589.95 | -1.01% | 75.40% |
| Intel | INTC | NASDAQ | 14.503 | 22.59 | 23.56 | 4.29% | -54.25% |
| Johnson & Johnson | JNJ | NYSE | 13.750 | 160.29 | 161.46 | 0.73% | -5.62% |
| Roche Holdings AG | RHHBY | OTC | 14.143 | 37.77 | 39.18 | 3.73% | -24.20% |
| Merck & Co. | MRK | NYSE | 11.381 | 109.77 | 109.73 | -0.04% | 43.18% |
| Novartis | NVS | NYSE | 9.387 | 113.95 | 116.22 | 1.99% | 32.87% |
| Toyota | TM | NYSE | 10.724 | 180.02 | 174.06 | -3.31% | -6.46% |
| Pfizer | PFE | NYSE | 8.336 | 28.58 | 29.16 | 2.03% | -50.62% |
| Alibaba | BABA | NYSE | 6.006 | 114.53 | 110.14 | -3.83% | -7.28% |
| GM | GM | NYSE | 6.727 | 45.68 | 47.87 | 4.79% | -18.35% |
| Honda | HMC | NYSE | 8.806 | 32.62 | 31.69 | -2.85% | 11.39% |
| Ford | F | NYSE | 9.340 | 10.57 | 10.72 | 1.42% | -48.39% |
| AbbVie | ABBV | NYSE | 13.949 | 193.90 | 194.19 | 0.15% | 43.42% |
| Sanofi SA | SNY | NYSE | 7.750 | 55.47 | 54.96 | -0.92% | 9.70% |
| Cisco | CSCO | NASDAQ | 6.331 | 52.75 | 54.25 | 2.84% | -14.39% |
| Bristol-Myers Squibb | BMY | NYSE | 7.130 | 53.96 | 52.20 | -3.26% | -16.28% |
| Astra Zeneca PLC | AZN | NYSE | 6.056 | 77.47 | 77.35 | -0.15% | 32.79% |
| IBM | IBM | NYSE | 5.368 | 226.00 | 233.26 | 3.21% | 74.52% |
| Oracle | ORCL | NYSE | 6.928 | 170.86 | 175.77 | 2.87% | 101.55% |
| Eli Lilly & Co. | LLY | NYSE | 8.606 | 887.16 | 932.06 | 5.06% | 237.43% |
| Stellantis NV | STLA | NYSE | 5.309 | 13.32 | 13.01 | -2.38% | -33.42% |
| Total | 4005.40 | 4049.72 | 1.11% | 43.62% | |||
| ICT | 1994.09 | 1995.32 | 0.06% | 37.64% | |||
| Automotive | 292.99 | 287.89 | -1.74% | -15.71% | |||
| Biopharmaceutical | 1718.32 | 1766.51 | 2.80% | 71.80% | |||
