IC Insights said consolidation in the semiconductor industry has affected the growth rate of R&D spending over the past five years, although over the longer term, the annual rate of R&D spending has been slowing since 1980.
Today, however, R&D expenses are expected to grow over the next five years, with technical challenges including 3D chip stacking, EUV in advanced processes, and increasingly complex products.
R&D spending covers IDM, Fabless, and foundries, excluding other companies and organizations involved in semiconductor-related technologies, such as production equipment and material suppliers, packaging and manufacturers, test service providers, universities, government-funded laboratories and research Institutes such as IMEC in Belgium, CAE-Leti in France, the Industrial Technology Research Institute (ITRI) in Taiwan and the Sematech consortium in the United States – merged into the State University of New York (SUNY) Institute of Technology in 2015.
Since the 1990s, the semiconductor industry has led all other major industrial sectors in R&D intensity, spending an average of about 15% of total sales annually on R&D, according to IC Insights.
However, over the past three years, the semiconductor industry’s R&D sales as a percentage of total sales slipped to 13.5% in 2017 and 13.0% in 2018, mainly due to the very fast growth in revenue from memory.
The semiconductor industry R&D/sales ratio rebounded to 14.6% in 2019, when memory revenue fell 33% and the overall semiconductor market fell 12%. According to a global survey in the EU Industrial R&D Investment Report, the R&D/sales ratio in the pharmaceutical and biotech sector is 15.4%, the highest in the 2019 ranking.
Over the past 41 years (1978-2019), R&D spending has averaged 14.6% of semiconductor sales.
Since 2000, semiconductor R&D spending has been below 14.6% in only four years, in 2000, 2010, 2017 and 2018. In these four years, the lower rate was mainly due to excessive revenue growth, while Not a lack of R&D spending.