Four Chinese big tech companies have entered the top 25 global companies with the highest research and development (R&D) investments for the first time. Among Chinese companies, Huawei, which has the largest R&D investment scale, invested more than the US semiconductor company Intel, and is rapidly closing the gap with US big tech companies such as Apple and Microsoft (MS). This indicates that the technological gap between the US and China is significantly narrowing amid intensifying US-China rivalry over advanced technologies like semiconductors.
Bloomberg reported this on the 10th (local time) after analyzing the top 25 global companies with the highest R&D investments over the past year.
The top 1 to 5 spots in R&D investment rankings were monopolized by US big tech companies. US e-commerce company Amazon ranked first with an investment of $73.2 billion, followed by Alphabet, Google's parent company ($39.5 billion), Meta ($35.3 billion), Apple ($27.7 billion), and MS ($26.6 billion) in second to fifth places.
"From 1 to 4 Chinese Companies in the Top R&D Investment Rankings in 5 Years"
Chinese telecommunications company Huawei invested $23.5 billion in R&D last year, ranking sixth globally after MS. The investment gap between Apple, MS, and Huawei was only $3.1 to $4.2 billion. ByteDance, which operates the video-sharing platform 'TikTok,' ranked 12th with $14.6 billion, while China's largest internet company Tencent ($13.4 billion) and largest e-commerce company Alibaba ($8 billion) ranked 14th and 23rd, respectively.
The total R&D expenditure of these four Chinese big tech companies last year reached $60 billion (approximately 79.4 trillion KRW). Five years ago, Huawei was the only Chinese company in the top R&D investment rankings, and ten years ago, no Chinese companies were in the top ranks, indicating that Chinese competitors are rapidly catching up technologically.
ByteDance's R&D investment amount is based on 2021 data. Considering last year's revenue growth rate (30%), Bloomberg expects that ByteDance's R&D investment has also significantly increased. In the case of Amazon, which had overwhelmingly large investment amounts, there is a view that Amazon should be excluded from the investment rankings because it accounts for the costs of original content investment for its online video service (OTT) under the R&D category rather than pure R&D investment.
US Pressure on China "Will Backfire"
The Biden administration has continued its pressure campaign against China to maintain US superiority in advanced technology fields such as semiconductors, artificial intelligence (AI), and 5th generation communication (5G). In October last year, citing national security, the Biden administration began export restrictions targeting China to block China's advanced semiconductor production, and Japan and the Netherlands recently joined the US-led export controls on semiconductor equipment to China.
Bloomberg evaluated that China has reduced its dependence on external sources after US sanctions and no longer needs Western advanced technology, suggesting that China's practical decoupling from the West is not far off. It also warned that US policies focused on containing China for national security reasons may do more harm than good. Peter Wennink, CEO of Dutch semiconductor equipment company ASML, warned that export controls on advanced technology to China will ultimately be a self-defeating move that pressures China to accelerate its own advanced technology development.
Meanwhile, global automakers preparing for the paradigm shift to electric vehicles showed R&D spending levels similar to those of ten years ago. Global automakers in the rankings, such as US General Motors (GM) and Japan's Honda, showed R&D spending levels similar to ten years ago when adjusted for inflation, while only Germany's Volkswagen and BMW significantly increased their R&D investments. In contrast, US Ford reduced its R&D spending to one-third of the level from ten years ago.
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