CONNECT WITH US

Taiwan corporate R&D spending hits record NT$800 billion in 2023 despite slowdown

Bryan Chuang, Taipei; Willis Ke, DIGITIMES Asia 0

Credit: DIGITIMES

Taiwan's enterprises saw their combined annual R&D expenditures surpass NT$800 billion (approx. US$24.6 billion) for the first time in 2023, reaching NT$801.5 billion. This marked a 3.7% increase from the previous year and accounted for 85.1% of the nation's total R&D expenses, according to a survey released by the National Science and Technology Council (NSTC) on October 31.

The NSTC reported that Taiwan's total R&D expenditures in 2023 rose by 4.4% year over year, reaching NT$937.3 billion. This total includes NT$135.8 billion from the government sector, which represented an 8.6% year-over-year increase. However, while private enterprises in Taiwan saw a 3.7% rise in R&D spending, this growth rate lagged behind the average of 8.8% recorded over the past five years. This decline is largely attributed to semiconductor companies reducing their R&D investment expansion.

The semiconductor industry weathered significant challenges in 2023, following the Russia-Ukraine war, which began in February 2022. The conflict triggered a surge in global natural gas prices and exacerbated inflation. In response, central banks worldwide implemented high-interest rate policies to curb inflation, leading to increased economic uncertainty. As a result, Taiwan Semiconductor Manufacturing Company (TSMC) postponed large-scale recruitment drives and experienced a slowdown in R&D investment growth, as indicated by the NSTC.

The NSTC survey also highlighted that Taiwan's R&D efforts remain largely focused on technological development, such as process improvements. In 2023, NT$689.7 billion was allocated to this area, accounting for 73.6% of the national R&D expenditure and up 5.5% year over year. In contrast, funding for applied research decreased by 1.4% to NT$173 billion, comprising 18.5% of the total. Basic research saw an 8.8% increase, receiving NT$74.6 billion for an 8% share of the total.

The shift in R&D spending priorities reflects changing corporate strategies, with the NSTC noting that businesses are increasingly focusing on technological development while higher education institutions have intensified their investment in basic research.

According to academic classifications, basic research entails experimental or theoretical studies conducted without specific practical applications in mind. In contrast, applied research focuses on leveraging new knowledge from basic research for practical use, often termed "research commercialization." Technological development involves creating new products or improving manufacturing processes, including efforts to boost production efficiency.

Meanwhile, the average cost of government-commissioned research conducted by legal entities and academic institutions rose from NT$4.15 million in 2019 to NT$5.14 million in 2023. While this figure is lower than corporate investment, it remains significantly higher than that of higher education institutions.

R&D expenditures cover both recurrent costs, such as personnel expenses, and capital investments in land, buildings, instruments, equipment, software, and intellectual property. The survey results indicate a consistent increase in the average personnel costs for R&D personnel across the country, with the corporate sector maintaining higher average costs compared to other sectors.