Which companies spend the most on research and development (R&D)?


“You can’t solve a problem at the same level it was created. You have to rise above to level up. ~ Albert Einstein

Research and development (R&D) is imperative to withstand competition, waves of disruption and obsolescence. R&D initiatives provide an innovation advantage to companies for their products and services. Here is an overview of the main R&D investors based on the annual reports.

Amazon (AMZN), $ 42.74 billion

Amazon is among the top spenders on R&D, although its financial statements do not mention R&D as a separate line. Amazon’s SEC File Reveals Huge Spend of $ 42.74 Billion in FY2020 (11.1% of Net Sales) on “Technology and Content”, Up from $ 35.93 Billion dollars in fiscal 2019. In 2017, the SEC asked Amazon: “Please disclose a break in research and development spending by project, activity or in any other way that you believe will provide more transparency as to the scope and direction of your research and development activities. The company’s R&D expenses continue to be presented under “technology and content” in its financial statements. In 2020, it obtained 2,244 patents, the majority of which related to cutting-edge technologies such as artificial intelligence (AI), machine learning and computer vision at the heart of its activities, whether in cloud computing, voice-based virtual assistant, no cash. Go to stores, drone deliveries or robotic warehouses.

Alphabet (GOOG, GOOGL), $ 27.57 billion

The IPO letter from the founders of Google in 2004 said, “Our business environment is changing rapidly and requires long-term investment. We will not hesitate to invest heavily on promising new opportunities. We will not back down from high risk, high yield projects due to the pressure on short term earnings. Over the years, the company may have changed its name, but its basic philosophy remains the same and it continues to allocate a significant portion of its revenue to its R&D initiatives. Alphabet spent $ 27.57 billion on R&D, which is equivalent to 15.1% of its revenue of $ 182.57 billion in fiscal 2020. The company’s R&D shipments have more than doubled since fiscal 2016.

It was granted 1,817 patents in 2020. Investments in the development of AI and AI-enabled devices and software continue to drive the entire company’s portfolio forward. On his recent earnings conference call, CEO Sundar Pichai said, “We are one of the largest R&D investors in the world and, of course, AI is an integral part of it.

Huawei, $ 22.04 billion

Huawei is one of the world’s leading providers of information and communication technology (ICT) infrastructure and smart devices. In fiscal year 2020, it spent around 141.893 billion yen on R&D, which equates to 22.04 billion dollars. Its R&D expenses accounted for 15.9% of its total revenue of 891.37 billion yen in fiscal year 2020.

Huawei is one of the largest patent holders in the world; the company obtained 2,761 patents in 2020, an increase of 14% compared to 2019. In total, Huawei holds more than 100,000 active patents in more than 40,000 families. The number of people working in R&D at Huawei is around 105,000, which is more than half of its total workforce. The company has three guiding principles for ecosystem and industry development: growth in the industry, collaboration, and value sharing. Huawei has partnered with major industry players to innovate in emerging areas such as cloud computing, 5G, and the Internet of Things (IoT).

Microsoft (MSFT), $ 19.27 billion

Microsoft has engaged in R&D across a range of technologies, tools and platforms with a focus on three interconnected ambitions: reinventing productivity and business processes; build an intelligent cloud platform; and create more personal computing. The company has increased its spending on R&D, with revenue rising, keeping the overall allocation at 13% over the years. In fiscal 2020, the company reported R&D spending of $ 19.27 billion (Microsoft’s fiscal year is July 1 to June 30). In the first nine months of the current fiscal year (until Match 2021), its R&D allocation had reached $ 15.03 billion.

In 2020, Microsoft Technology Licensing LLC (MLT) obtained 2,905 patents, the fourth highest in the world. MLT is a subsidiary that manages the company’s patent and technology transfer activities. In addition to its core R&D operations, the company runs Microsoft Research, which is one of the world’s largest corporate research organizations and works closely with top universities around the world.

Apple (AAPL), $ 18.75 billion

Apple has conventionally deviated from the thinking that links innovation to the amount of R&D spending. In 1998, Steve Jobs said, “Innovation has nothing to do with the amount of your R&D investment. It is not a question of money. It’s about who you have, how you’re led, and what you get. In fiscal 2020 (Apple’s fiscal year is October 1 to September 30), Apple spent $ 18.75 billion on R&D, which is equivalent to 7% of its net sales. In the first six months of fiscal 2021 (October 2020 – March 2021), Apple reported its R&D spending at $ 10.42 billion.

Apple’s 10-K reads: “The company continues to believe that targeted investments in R&D are essential to its future growth and competitive position in the market, as well as the development of new products and services. and updates that are at the heart of the company’s business strategy. . “The company has a healthy patent profile; it was granted 2,791 patents in 2020.

Samsung, $ 18.75 billion

The South Korean conglomerate Samsung is the largest non-American investor in R&D. Samsung spent 21,229.2 billion yen (equivalent to $ 18.75 billion) in fiscal year 2020, accounting for 9% of its sales. Samsung obtained 6,415 patents in 2020, placing it in second place. However, in terms of cumulative patent ownership, Samsung is the world leader with 80,577 active patent families.

Samsung’s research is guided by its vision of “shaping the future with innovation and intelligence”. The main areas of research include AI, data intelligence, robotics, next-generation communications and visual technology, and security. Samsung operates three levels of R&D organizations, the first is a business unit development team that works on market-ready technologies with a 1-2 year perspective, the second is the research institute that is developing a medium to long term technology with a 3–5 year outlook and the Samsung Advanced Institute of Technology which is developing core technology as seeds for future growth engines.

Facebook (FB), $ 18.45 billion

According to Facebook, its “business is characterized by innovation, rapid change and disruptive technology.” In fiscal 2020, it allocated $ 18.45 billion, or 21% of its revenue, to R&D spending. Facebook works in the fields of AR / VR, AI, blockchain and cryptocurrency, data science, computer vision, machine learning, cybersecurity, processing. natural language, etc.

Facebook has focused a lot on AR / VR, and in August 2020, Facebook introduced a new name for its AR / VR team — Facebook Reality Labs (FRL). Speaking in the FY2020 earnings call, Mark Zuckerberg said, “I think the next logical step here is an immersive computing platform that just delivers that magical sense of presence – that you’re really there with a other person or in another place. Our phones cannot provide this, nor any other technology that came before it. It’s going to unlock the kinds of social experiences I’ve dreamed of creating since I was a kid, and that’s what we’re aiming for at Facebook Reality Labs.

The top ten are completed by Volkswagen (VWAGY), Intel (INTC), Roche (RHHBY) and Johnson & Johnson (JNJ).

Disclaimer: The author has no position on the actions mentioned. Investors should view the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared based on the annual reports and 10-K filings. Any exclusion or error in it is completely unintentional.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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