The big picture: The competitive strength of hardware makers is often gauged by their research and development expenditure. However, an analysis of recent financial reports from various tech giants reveals that higher R&D spending does not always guarantee success. Intel's recent struggles and Nvidia's astronomical growth driven by the AI boom have broken conventional assumptions.
Recent insights from Tech Fund reveal a widening disparity in R&D budgets between competing hardware makers AMD and Nvidia, a key factor in Nvidia's increasing market dominance. In that same mix we could look at Intel, which currently appears much weaker than both despite dwarfing their R&D spending.
According to Tech Fund's analysis of Nvidia's and AMD's R&D expenditures over the past decade, Nvidia now spends twice as much as AMD. In 2013, their R&D budgets were roughly equal, but Nvidia's has since surged to approximately $12 billion, while AMD's has grown to ~$6 billion.
$NVDA is widening the R&D gap with its closest competitor. Annualizing last quarter's R&D spend, NVDA is investing now almost at twice the level of $AMD. And the latter will have to split R&D between GPUs, CPUs and FPGAs, whereas NVDA can fully focus on building out the AI stack. pic.twitter.com/nL4BpTPNeU
– Tech Fund (@techfund1) October 14, 2024
This disparity is further accentuated by the allocation of spending. Nvidia focuses nearly all its R&D efforts on AI, while AMD's smaller budget is spread across GPUs, CPUs, AI, and FPGA chips.
Although AMD has made impressive gains in the CPU market – recent generations of its CPUs have soundly defeated Intel – it continues to struggle against Nvidia in the GPU sector.
Intel currently faces seemingly endless trouble in CPUs, GPUs, and other areas despite outspending Nvidia's and AMD's R&D by a wide margin.
Source: Tom's Hardware (click to enlarge)
According to Tom's Hardware, Intel allocated $16 billion to R&D in 2023 – double the combined budgets of Nvidia and AMD. For 2024, the company projects R&D, market growth, and acquisition costs will range between $17 billion and $20 billion.
These funds are spread across diverse ventures, including CPUs, GPUs, quantum computing, and foundries, with significant hopes pinned on its forthcoming 18A process node.
Despite this hefty investment, Intel's market capitalization hovers at around $107 billion, ranking 160th globally. In contrast, AMD ranks 45th with a valuation of $229 billion or more than twice of Chipzilla's. Nvidia, with its near-total devotion to AI, has entered the $3 trillion club and is vying with Apple for the title of the world's most valuable company.
Nvidia's meteoric rise is particularly striking when compared to Apple's R&D spending. The Cupertino giant spent $27 billion on R&D in 2023 and $31 billion between September 2023 and September 2024. While some predict the eventual collapse of the AI bubble, which could bring Nvidia back down to Earth, there are no immediate signs of such a downturn.
Nvidia nearly doubles AMD's R&D budget – Intel's spending dwarfs both, but struggles to compete
