IC Insights: Global semiconductor company R&D spending expected to grow 9% in 2022

According to a new report from market research firm IC InSights, global semiconductor companies’ R&D spending is expected to grow 9% to $80.5 billion in 2022 after rising 13% to a record $71.4 billion in 2021. Total R&D spending by semiconductor companies is expected to grow at a compound annual growth rate (CAGR) of 5.5% to $108.6 billion between 2022 and 2026.

Prior to this, the COVID-19 outbreak in early 2020 disrupted the global supply chain, and many semiconductor companies took a cautious approach under multiple challenges such as epidemic prevention blockades and logistics blockages, restraining the growth of R&D spending. Despite business closures and other emergency measures to slow the impact of Covid-19, high market demand helped the chip industry's revenue grow 11% for the year. However, semiconductor R&D spending as a percentage of global industry sales slipped to 13.1% in 2021 from 14.5% in 2020 and 15.1% in 2019. The agency emphasized that while R&D spending fell by 1% at the time, total chip market revenue would have fallen by 12%.

Total semiconductor R&D spending has only declined in these four years since 1980 (-1% during the slowdown in 2019, -10% in 2009 after the industry was hit by a major global recession caused by the collapse of financial markets, and It fell -10% in 2001 and -1% in 2002, when the recession coincided with the bursting of the dot-com bubble at the turn of the century). After the global recession of 2008-2009, semiconductor R&D spending recovered strongly within a few years, but for the rest of the past decade, the chip industry, for a variety of reasons, including continued economic uncertainty and a historic wave of acquisitions, Spending slowed.

Since 2000, total semiconductor R&D spending as a percentage of global sales has exceeded the historical average of 14.5% in all but the five years (2000, 2010, 2017, 2018 and 2020) . The lower R&D-to-sales ratio over the five-year period has more to do with strong total revenue growth than weaker R&D spending by semiconductor suppliers.

The report shows that global semiconductor companies’ R&D spending will increase by more than 13% to a record $71.4 billion in 2021, and Intel will continue to rank first with an all-time high R&D spending of $15.2 billion (an increase of 12%), accounting for about 10% of the entire industry. 19%. For comparison, Intel's R&D spending grew by only 1% in 2020, while it fell by 1% in 2019.

Samsung ranks second, with spending rising 13% to an estimated $6.5 billion after a 23% increase in 2020. The South Korean memory giant has accelerated R&D spending on cutting-edge logic processes (5nm and below) to strengthen its competition with TSMC. The latter boosted R&D spending by 20% in 2021, to about $4.5 billion, after increasing R&D spending by 26% in 2020.

In 2021, 21 semiconductor suppliers will spend more than $1 billion in R&D, compared with 19 in 2020. R&D spending by the top 10 companies increased by 18% to $52.6 billion, or about 65% of the total R&D for the entire industry. Data for the upcoming second quarter shows that the top 10 companies will have an R&D/sales ratio of 13.5% in 2021, compared to 14.5% in 2020.