Samsung Electronics Co., the crown jewel of Korean chaebol Samsung Group, again topped research and development spending among the world’s largest technology companies in 2013, according to Apps Run The World’s annual vendor survey.
Samsung Electronics, maker of mobile phones and semiconductor products, invested $13.2 billion last year on R&D. That translates into 6.3% of its revenues, which totaled $210 billion in 2013. Fueled by a 12.3% growth in its revenues, Samsung’s R&D spend rose as a percentage of its sales increasing from 5.7% in 2011 to 6.3% in 2013.
Intel was the No. 2 R&D spender in 2013, plunking down $10.5 billion, or 20% of its revenues of $52.3 billion, on research and development. In 2012 Intel invested $10.1 billion in R&D, or 19% of its revenues of $53.34 billion.
As the largest tech vendor, Samsung’s increased R&D spending should not come as a surprise. In 2013, Samsung Electronics had 80,000 employees devoted to R&D, up from 50,000 in 2010. Samsung has also invested heavily in R&D activities beyond its Korea home offices. Currently about a third of its R&D personnel is based outside of Korea, compared with only a quarter in 2010.
For example, Samsung’s memory division now has R&D personnel in locations such as San Jose, CA; Xian, China; Israel and Bangalore, India. By 2015 the number of R&D employees at these Samsung memory offices is expected to jump to 700 by 2015, up from 500 in 2013 and zero in 2004.
The heavy R&D spending has resulted in an estimate of at least 36,000 US patents and 108,000 worldwide patents that Samsung has received so far.
At Samsung Analyst Day in November, the company said its R&D efforts would cover next generation memory based on new material resistive RAM, magnetic RAM; holographic display; smart home technologies as well as future telecommunication improvements. Already the world’s largest smart phone maker selling over 100 million units of Galaxy S and Notes series in 2013, Samsung is expected to leverage its clout in the mobile world to help boost its revenues, which are projected to double to over $400 billion by 2020.
Samsung’s aspirations will revolve around new skill sets with the company vowing to transform itself from a mostly hardware vendor to a software specialist. Already Samsung has on staff more than 40,000 software engineers and 1,600 designers many of whom are involved in user interface enhancement.
The implication is that it will spark more friction between Samsung and software powerhouses such as Google, both of which appear to be locked in a new battle over what gets to appear on the screen of next-generation Android phones.
The rest of the big R&D spenders included Microsoft at $10.4 billion or 13% of its revenues, Google at $8 billion or 13.4% of sales, Amazon at $6.5 billion or 8.7% of sales, IBM at $6.2 billion or 6% of sales, Cisco at $5.9 billion or 12% of sales, Qualcomm at $5 billion or 20% of sales, Oracle at $4.9 billion or 13% of sales, Apple at $4.5 billion or 2.6% of sales, HP at $3.1 billion or 2.8% of sales, and SAP at $3.1 billion or 13.6% of sales.
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Souce: Apps Run The World
These 12 tech vendors spent at least $3 billion on research and development in 2013 with their total spend hitting $81.3 billion, up 13% from $71.9 billion in 2012. The combined total revenues of these 12 tech giants were $991 billion in 2013, up 6.6% from $930 billion in 2012.
Following massive industry consolidation among technology companies, the common thread has been a concerted effort to drive more innovation through heavy R&D spending. For example, since 1994 Oracle has seen the number of its R&D employees spiking 20 times to 35,000, while its total headcount has only increased 10-fold to 120,000. While Oracle’s headcount fell during the Dot Com bust in 2000 and again in 2002, the number of its R&D staffers has continued to increase every year uninterrupted since 1994.
Despite a 2% rise in total revenues in its latest quarter, Oracle’s R&D spending jumped 6% to a record level of $1.27 billion. In fact, Oracle’s R&D spending has been rising pretty consistently since August 2004 just prior to its acquisition of PeopleSoft. The only exceptions were the slowdown due to the 2008 recession as well as several adjustments it made to accommodate major acquisitions including Sun Microsystems. What it suggests is that Oracle, like most tech giants, are throwing their weight behind R&D in order to assure future successes regardless of occasional market turbulence.
Other up and comers seem to be catching on. Facebook, for example, saw its R&D spending soar to $1.4 billion in 2012 from $388 million in 2011. In 2013 its R&D spending stabilized at $1.4 billion.