Taiwanese firms should spend more on research and development (R&D) to boost their profitability, as global companies are shifting resources away from physical products to software and services and the change is paying off, accounting firm PricewaterhouseCoopers LLP (PwC) said in a report yesterday.
Thirty-two Taiwanese firms made this year’s Global Innovation 1000 Study — two fewer than last year’s report — with R&D spending totaling NT$392.8 billion (US$12.44 billion), or 3 percent of their combined revenues, PwC Taiwan said.
The figure represents a 0.1 percent year-on-year increase in R&D investment, but the nation still lags behind the 3.5 percent investment seen in South Korea, 4.1 percent in Japan, 6.1 percent in the US and Switzerland’s 8.3 percent, the report said.
“The figures suggest room for improvement on the part of the nation’s firms, given the close and positive relationship between spending on R&D and profitability,” PwC Taiwan executive vice president Paul Liu (劉鏡清) said.
The total R&D spending by the 1,000 firms cited increased 0.04 percent to US$679.8 billion, essentially unchanged from the previous year due to fluctuations in foreign currencies, the report said.
However, over the past five years R&D spending on software and services increased from 54 percent to 59 percent of the total, with the proportion expected to reach 63 percent by 2020, the report said.
In contrast, R&D spending on product-based offerings fell from 46 percent to 41 percent over the five-year-period and might fall to 37 percent by 2020, the report said.
Companies that reported faster revenue growth than their competitors allocated more R&D investment to software and services, Liu said.
Software-oriented firms should raise their R&D spending to 7 percent of revenue because the innovation-driven business model is increasingly replacing the cost efficiency approach, Liu said.
R&D spending hit 9 percent of revenue at industrial computer maker Advantech Co (研華科技), 8.25 percent at machine toolmaker Hiwin Technologies Corp (上銀科技) and 23.2 percent at handset chip designer MediaTek Inc (聯發科), Liu said.
Worldwide, Apple Inc retained its top position in R&D spending, with Alphabet Inc, owner of Google, coming second in the rankings of most innovative companies, the report said.
As R&D resources move to software and services, talent has shifted as well, the report said.
By 2020, the number of electrical engineers might fall 35 percent while demand for data engineers could double, the report said.
Local firms should reconsider their position on the world stage rather than limiting themselves to being “followers” of technological developments, Liu said.
R&D spending for the healthcare industry might grow more than quickly than other sectors, rising to US$165 billion in 2018, overtaking the estimated US$159 billion spending of the computer and electronics industry, PwC said.
After several years flying high as Asia’s best Nvidia Corp proxy, Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) is increasingly vying with other artificial intelligence (AI) stocks for investor attention. Stock traders are chasing a wider array of beneficiaries as mainstream usage of AI creates demand for hardware beyond the most-advanced chips TSMC makes for Nvidia. Subthemes from the deepening memory crunch to advances in robotics are also luring bids. At the same time, investment caps on single stocks are pushing funds to diversify, while retail investors long familiar with TSMC through its US depositary receipts are being offered a broader set of
UNDER MICROSCOPE: Taiwan detained three people who allegedly conspired to buy servers in Taiwan and export them using fraudulent documentation, prosecutors said Nvidia Corp chief executive officer Jensen Huang (黃仁勳) on Saturday urged Super Micro Computer Inc to tighten up on compliance after Taiwan detained three people this week for allegedly making fraudulent declarations about artificial intelligence (AI) servers made by its US partner. The development marked the nation’s first crackdown on semiconductor smuggling, which grew after the US slapped restrictions on exports of high-end chips such as Nvidia AI accelerators to China. Nvidia is “rigorous” in explaining regulations to all of its partners, Huang told reporters after arriving in Taipei. “Ultimately Super Micro has to run their own company,” he said in response to
TECH RELIANCE: Growth is increasingly reflecting an unequal K-shaped distribution, where technology sectors outperform and other industries struggle, an expert said Standard Chartered Bank has significantly raised its forecast for Taiwan’s economic growth to 9.5 percent this year, up from 7.6 percent previously, citing surging artificial intelligence (AI) demand driving exports, semiconductor production and investment. The upgrade reflects a sustained AI supercycle that continues to fuel demand for advanced chips and technology infrastructure, which form the backbone of Taiwan’s exports, the bank said in a report this week. “We raise our 2026 growth forecast to reflect a much stronger-than-expected first-quarter GDP figure,” Standard Chartered senior economist for greater China and Asia Tommy Wu (胡東安) said in the report. Driven largely by a 35.3 percent
Netherlands-based semiconductor equipment supplier ASML Holding NV yesterday said that it is planning to hire an additional 1,000 people in Taiwan this year in response to growing demand from clients. ASML had previously planned to recruit 600 people this year, but that the plan has been adjusted upward, ASML vice president and ASML Taiwan general manager Grace Wang (汪佳慧) told reporters. ASML has a workforce of more than 4,500 in Taiwan, accounting for about 10 percent of its global total, Wang said. This year’s recruitment campaign would focus on adding people in the customer support, manufacturing and supply chain domains to assist ASML
RSS