The R&D World Index (RDWI) for the week ending January 19, 2024, closed at 3,297.56 for the 25 companies in the RDWI. The Index was up 0.70% (or 22.95 basis points). Fourteen RDWI members gained value last week from 0.22% (Merck & Co.) to 3.43% (IBM). Eleven RDWI members lost value last week from 0.40% (Bristol-Myers Squibb) to -4.41% (Roche Holdings AG).
Taiwan Semiconductor Manufacturing Company (TSMC), Hsinchu, Taiwan, announced last week that it was delaying the production start at the second of two manufacturing plants it is building in Arizona. This plant was scheduled to begin production of 3-nm-based advanced semiconductor chips in 2026, which has now been pushed back to 2027 or 2028. Its first plant was scheduled to begin production in 2024, but that was earlier delayed to 2025. Reasons for the delays were cited as being a shortage of skilled workers in the U.S. and difficulty in negotiations over how much money the U.S. government will provide. Some analysts have noted that the production delays could be a negotiating tactic to secure more funding from the U.S. government’s $53 billion Chips Act. In a separate news item, TSMC forecast last week that semiconductor chip revenue is expected to grow more than 20% in 2024 over its revenue in 2023. Revenue in 2023 fell by 2% year over year for TSMC due to a pervasive supply glut throughout the semiconductor supply chain. This supply issue has now abated and returned to its normal growth curve. The growth is noted as being fed by surging demand for generative AI devices.
Electric vehicle (EV) manufacturer BYD, Shenzhen, China, announced last week that it has developed a smart car system, Xuanji, which offers automated parking, and voice recognition capabilities like that provided by Tesla and other EV manufacturers. To provide these capabilities, BYD has been hiring large numbers of software engineers — the company has hired about 90,000 engineers for its R&D efforts. More than 4,000 of these researchers work on L2-level smart driving projects. The company has about 230,000 employees spread over 50 global campuses. BYD also announced last week that it is investing more than $700 million to build all-terrain professional test drive sites throughout China. The company also has a conditional testing license for L3 autonomous driving on high-speed roads in Shenzhen, China. BYD sold more than 3 million EVs in 2023, overtaking Tesla in overall battery EVs. Overall, China’s EV manufacturers expect to sell about 11.5 million EVs in 2024, a 22% increase over the EVs sold in 2023, according to the China Association of Automobile Manufacturers.
The recent 25% wage increases (over four years) negotiated by the United Auto Workers (UAW) union have forced most U.S. automakers to take a stronger look at increasing the automation operations at their factories. Detroit auto executives are now strategizing ways to blunt these increased costs, which according to Ford Motor Co., would add about $900 in cost per vehicle by the time the current labor contracts expire in 2028. Dozens of new battery factories and EV plants open the doors to broader use of high-tech and automated systems, according to analysts. It is easier and less costly to install robots in a new facility compared to retrofitting an existing facility. Automakers are looking to introduce more robots and other automation systems over time, replacing workers as they retire, rather than displacing their current workforce. The automakers also note that the productivity gains from robotization will be zeroed out by the required personnel for the repair, maintenance, and programming of the robots.
RDW Index member Ford Motor Company, Dearborn, Michigan, announced last week that it was cutting the workforce at its Lightning electric truck factory in Dearborn from two shifts to just one shift and relocating about two-thirds of its 2,100 hourly workers, mostly to factories that build gasoline-engine vehicles. These cuts resulted from reduced demand for EVs due to high initial costs, limited charging infrastructures, and effects on EVs during the recent brutal winter snowstorms that hit much of the U.S. in January. The cold weather revealed the increased charge times and reduced range of EVs during these periods.
Samsung, Suwon, South Korea, introduced its latest version of its Galaxy smartphones last week. The company noted that these devices are the first to feature on-device AI, meaning that they can process generative AI data directly on the cell phone without relying on sending the data up to the cloud. Galaxy S24 devices will begin shipping at the end of January. RDW Index member Apple, Cupertino, California, also has stated that it plans to include on-device AI in its new products introduced later this year. The on-device AI will provide real-time translation, image-based web searches, and photo-editing features. The Samsung AI is supported by a partnership with Google, which has released its own Pixel 8 smartphones with generative AI abilities.
Diesel engine developer Cummins, Columbus, Indiana, Paccar truck-builder, Bellevue, Washington, and Daimler Truck U.S., Portland, Oregon, agreed to jointly build a $2 billion factory near Memphis to build batteries for commercial vehicles. Initial output is projected to supply enough batteries annually to power more than 40,000 medium- and heavy-duty trucks. Battery-powered trucks and buses have been available for years, but truck manufacturers have not been as aggressive as the consumer vehicle industry in changing their production to battery-electric models. Lithium iron phosphate (LFP) battery technology is being provided by EVE Energy, Huizhou, China which will own about 10% of the collaboration.
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) that invested a cumulative total of nearly $260 billion in R&D in 2019, or approximately 10% of all the R&D spending 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.