SemiConductor R&D Spend by Company

[tomatoma]

Intel’s R&D spending must cover both product development and manufacturing (Intel Foundry), whereas competitors such as TSMC, AMD, Nvidia, Broadcom, Qualcomm, MediaTek, Apple, Google, Meta, Microsoft, and Amazon can focus their R&D on either products or manufacturing.

Beyond efficiency concerns, Intel may simply be outgunned by a large number of highly focused rivals. Its R&D is spread too thin across many fronts to sustain the end-to-end IDM model.

Honestly, I think Apple is doing something similar to IDM, but...

 

[MKWVentures]

With $53 billion in revenue in 2024, Intel is a leader in the semiconductor market, although it is facing challenges.



If costs are incurred during the development process and risk production, I believe there is flexibility for a company to decide whether to classify them as production costs, R&D expenses, or split them between both.

Under current IRS regulations, proposed and passed during the first Trump administration and effective since 2022, companies are required to amortize domestic R&D expenses over 5 years and foreign R&D expenses over 15 years. This may influence how companies approach cost allocation.

For example, Nvidia has generated substantial profits in recent years, and it may tend to allocate more costs to the production expense category in order to reduce its tax burden as much as possible.

Other companies, however, may take the opposite approach, allocating more expenses to the R&D category (spreading costs over 5 years) so their financial results appear more profitable, or their losses appear smaller.

Once you determine it is an RnD expense... you have options. Risk production is declared to put the spending into inventory and eventually COS. before that it is RnD.

So going back to AMD. I believe they spend a lot on RnD for product and process development that is before Risk Production. Make sense?

 

[MKWVentures]

In some cases, even shippable wafers or chips may never appear directly in a company’s accounting books.

For example, suppose an autonomous robot company (Trust Me Robots) designs an AI chip and asks its OEM assembly partner (Do It Corp.) to place chip orders with a foundry (Be Happy Semi Manufacturing Corp.).

When the finished robots (with the AI chips installed) arrive at Trust Me’s warehouse, Trust Me pays Do It Corp. for the full cost of production, including the AI chip expenses.

Meanwhile, Be Happy Semi receives payment from Do It Corp. for manufacturing the AI chips, according to their contract.

By using this approach, Trust Me Robots can better manage its inventory levels and the impact on its financial statements.

you are correct If you have a subcon, ownership of inventory and expenses is always a discussion and advantage. I did this for many years from all sides and can discuss all the options and pros and cons. EMS/ODMs will have weekly discussions with you if they are putting out money LOL.

Also, People put manufacturing expenses into RnD in order to get tax credits. I can give examples of this

So yes accounting has lots of options (i wont say games LOL)

 

[KevinK]

Yes, I totally agree. We should take a closer look at Intel’s 15 years of R&D expenses shown in my table to find broader information rather than just focusing on each single year.

We need to find a way to compare a particular year’s net profit with the R&D spending from previous years, such as the past 3 or 5 years. Do you have any suggestions?

Depends what we are trying to figure out. Not sure there are externally available metrics for "R&D efficiency", though I know some companies have them based on specific programs, business groups or products. I'm guessing that Intel internal metrics would be very messy because there is (or was ) such a muddling between the design side and fab side which each have very different return horizons.

 

[chip99monk]

Interesting to designate Qualcomm as a foundry...

These lists are also interesting and subject to debate. (Looks like the source for this is Tech Insights.) Assuming Chinese firms are left off due to lack of verifiable data? Would have expected SMIC, YMTC, etc. to at least break $1B. Curious if companies that do in-house design (Apple, Meta, Amazon, Alphabet, etc.) don't make the cut or are just ignored for this list?

Still, interesting to see the range of R&D expenses, from SK Hynix (6.9%) and TSMC (7.1%) to Broadcom (30.3%) and Intel (33.6%). Really runs the gamut.

Also, looks like SK Hynix may be on track to overtake Intel in revenue this year? Wild times indeed.

After Bill McLean retired a few yrs ago Bill’s IC Insights of Scottsdale, AZ ( in the thick of things ) was bought by TechInsights of the Far North ( Canada, a lot of Moose & Lumberjacks but NO wafers ) and some common sense ( distinction between IDMs, Fabless and their Foundries ) seems to have gotten lost in the process and there is considerable double billing in this latest Table ( which Bill M. had been publishing for over 3 decades ).