Global R&D spending has declined slightly but less than the decline in net sales, showing the strategic importance companies place on R&D. North America and Europe account for most R&D investments but Asia contributes more when adjusting for purchasing power parity. Several industries like automotive, semiconductors and telecom saw the largest decreases in R&D spending between 2008-2009 and 2009-2010.

1. Global R&D Benchmarking
December , 2010
This report is solely for the use of Zinnov client and Zinnov personnel. No part of it may be circulated, quoted,
or reproduced for distribution outside the client organization without prior written approval from Zinnov

2. Global R&D spending has declined/ decreased; however, this decline is much lower than the
decline in net sales, indicating the strategic importance of R&D
Global R&D Investments Growth Trends, 2006-10 Global Net Sales Trends, 2006-10
(USD Billion) (USD Billion)
560 17,000
549 16,500 16,684
540
538 16,000
520
15,500
511 15,336
500 15,000
14,953
480 14,500
14,000 14,134
460 468
13,500
440 13,000
420 12,500
2006-07 2007-08 2008-09 2009-10 2006-07 2007-08 2008-09 2009-10
 Companies like Nokia, Sony, Daimler, Panasonic and Robert Bosch, have only slightly reduced their R&D
spending even though net sales has taken a big hit in the last year
 Analysis of top R&D spenders across verticals reveals that in R&D spending in the latest quarter (Sep 2010) went
up by an average of 11% compared to last year
Source: Zinnov analysis of global top 1000 R&D spenders 2

3. The Top 500 R&D spenders account for close to 90% of the total corporate R&D spending in
the world; only three of the top 10 R&D spenders in 2009-10 were from North America
Contribution of Top R&D Investors in the Total Company 2009-2010 2008-2009 2006-2007
Global 1,000 R&D Spend Name Rank Rank Rank
Change Change
Toyota Motor 1 0 0
Roche 2 +2 +6
35%
Microsoft 3 -1 +3
30% 30.5% Volkswagen 4 -1 +6
30.3% Pfizer 5 -1 -3
25%
Novartis 6 +4 +12
20% Nokia 7 0 +10
Johnson & 8 0 -3
15% Johnson
15.4% 9 +2 0
14.1% Sanofi-Aventis
10% Samsung 10 +5 +10
Electronics
9.7%
5% Siemens 11 +3 +5
General Motors 12 -7 -5
0%
Honda Motor 13 0 +2
0-10 11-50 51-100 101-500 501-1000
Daimler 14 -2 -11
GlaxoSmithKline 15 +6 -1
Companies marked in Red have shown continuous decrease in
rank in last four years. The Scenario is opposite for companies
Source: Zinnov analysis of global top 1000 R&D spenders marked in Green.

4. North America (NA) and Europe (EU) account for the majority of investments, but
considering the PPP conversion, APAC contribution is significantly higher
Split of Top 1000 Companies by Geography Split of R&D Investment of Top 1000 Companies by Geography
ROW ROW ROW
2% 1.2% 2.8%
APAC
NA
10%
35%
NA
NA
34.7%
36.4%
EU
33%
Japan
20%
Japan Japan
22.3% 17.0%
PPP PPP
PPP PPP
Conversion Conversion
Country
(Local
Conversion Country
(Local
Conversion EU
(USD) (USD)
Currency) Currency) EU 32.5%
US 1.00 1.00 UK 0.65 1.08
35.5%
Canada 1.23 1.17 Korea 872.00 0.76
France 0.93 1.38 China 4.09 `
0.57
APAC
APAC
Germany 0.89 1.33 Japan 134.34 1.49 12.5%
6.2%
Spain 0.79 1.18 India 16.54 0.36
w/o PPP At PPP
Note: Average values have been taken for PPP analysis
Source: Zinnov analysis of global top 1000 R&D spenders; UN Statistical Data on PPP Conversion 4

5. Companies in the APAC region continued to increase their R&D investments against the
prevailing trend of reducing R&D spending followed by companies in other geographies
R&D investments in year 2008-2009 and 2009-2010 split by Geography
250000
Arrow indicates whether R&D as a % of sales
increased or decreased compared o last year`
2.1% 5.1%
200000
0.1% Sum of R&D 2008-2009
150000
Sum of R&D 2009-2010
100000
50000 13.2%
7.3%
0
APAC EU Japan NA Others
Source: Zinnov analysis of global top 1000 R&D spenders

6. This presentation will be focused towards the highlighted verticals below, which account for
more than 63% of the total R&D investments in the top 1,000 list
Vertical R&D Investment of Top 1,000
Split of Top 1000 Companies by Vertical
Investors
Telecom &
Aerospace & USD 198.5
Networking Others
Defense Computer
Bn 36.9%
5.9%
3.3% Hardware/
Software/ Consumer
Internet Electronics Automotive USD 86.5 Bn 16.1%
Semiconduc 6.0% 5.4%
tor
Automotive Consumer
7.5% USD 59.4 Bn 11%
7.3% Electronics
Industrial USD 58.8 Bn 10.9%
Telecom &
USD 46.8 Bn 8.7%
Networking
Industrial Software/Internet USD 38.4 Bn 7.1%
20.0%
Others
44.6% Semiconductors USD 29.8 Bn 5.5%
Aerospace &
USD 20.2 Bn 3.8%
Defense
USD 538.5
Total
Bn
Note: *Others include Pharmaceutical, Biotechnology, Media & Entertainment, Energy and others
Source: Zinnov analysis of global top 1000 R&D spenders 6

7. However, almost all verticals witnessed a decrease in absolute R&D investments with
Automotive, Semiconductors and Telecom showing the maximum percentage decrease
120000 R&D investments in year 2009-2010 and 2008-2009 split by Vertical
-11.6%
100000
R&D in 2008-2009
R&D in 2009-2010
80000
60000
-3.9%
40000
-7.4 %
20000
0
Aerospace & defence Automotive Computer Industrial Semiconductors Software/Internet Telecom &
hardware/Consumer Networking
Electronics
Source: Zinnov analysis of global top 1000 R&D spenders

8. During the recent economic downturn companies in most verticals continued to spend the
similar percentage of revenue on their R&D activities
Total R&D Investments as Percentage of Net Sales (Top 1,000 R&D Spenders) , 2009 -2010
18.0%
1. Size of the Bubble Represents the relative
16.0%
Semiconductors Total Net Sales of the Industry Vertical
2. Arrow indicates whether R&D as a % of
14.0% sales increased or decreased compared o
last year
12.0% Software
Percentage of Net Sales
R&D Investments as
10.0%
8.0%
Consumer Electronics /
6.0% Computer Hardware Automotive
Aerospace & Defense Telecom &
4.0% Networking
Industrial
2.0%
0.0%
0 10 20 30 40 50 60 70 80 90 100
Total Vertical R&D Investments
(USD Billion)
Source: Zinnov analysis of global top 1000 R&D spenders 8

9. North American companies are the largest contributor towards software product/ internet
R&D with Europe coming a distant second
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Software Vertical by
Software Vertical by Geography Geography and Revenue Ranges (USD)
ROW APAC
0.4% EU 0.6%
11.6% 44 3 Arrows indicate the change in
number of companies from year
2006-07 to 2009-10
8
7
NA
87.4%
29 12
1
Company Geography 2
2
Microsoft North America 11 3
2
IBM North America 3
2
Oracle North America
Google North America NA EU APAC ROW
SAP Europe 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Source: Zinnov analysis of global top 1000 R&D spenders 9

10. Majority of the companies in the Industrial vertical are small/medium sized contributing
aggressively towards R&D investments; companies from APAC are on the rise in this vertical
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Industrial Vertical by
Industrial Vertical by Geography Geography and Revenue Ranges (USD)
ROW APAC
6.7% 79 6 Arrows indicate the
0.4%
change in number of
3 companies from year
NA 5 2006-07 to 2009-10
30.0%
EU
9 4
40.2%
48 47
Japan 3 2
22.7% 6 6
71
7
23
39 39
Company Geography 2
Siemens Europe 23
3
General Electric North America
Honeywell North America 3
Schneider Europe NA EU APAC Japan ROW
Mitsubishi Heavy Japan 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn
Source: Zinnov analysis of global top 1000 R&D spenders 10

11. North America accounts for more than 65% of total R&D spend in Semiconductor vertical
with significant contribution from APAC & EU geographies
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Semiconductor Vertical by
Semiconductor Vertical by Geography Geography and Revenue Ranges (USD)
ROW
3.0% 44 6 Arrows indicate the
APAC
change in number of
12.1%
4 companies from year
EU 2006-07
12.9% 5
Japan
6.9%
NA
65.1%
1
35 15
3
1 9
Company Geography 1
5
Intel North America 12
2 9 2
STMicroelectronics Europe
2 1
Advanced Micro Devices North America 1 1
Broadcom North America NA EU APAC Japan ROW
Texas Instruments North America 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Source: Zinnov analysis of global top 1000 R&D spenders 11

12. Consumer Electronics/ Computer Hardware companies are majorly concentrated in the
Japan and Asia-Pacific region
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Consumer Electronics/
Consumer Electronics/ Hardware Vertical by Geography Computer Hardware Vertical by Geography and Revenue Ranges
(USD)
ROW 0.0%
2.1% NA 17
APAC
12.7% 18.3% 2
Arrows indicate
EU 14 the change in
1 number of
6.2%
12 companies from
2
9 year 2006-07
2 2
1
Japan 1
60.7% 8
1
6
10
9
3
7
Company Geography
1
Samsung Electronics APAC
2 2
Panasonic Japan
Sony Japan
NA EU APAC Japan ROW
Hitachi Japan
Toshiba Japan 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Source: Zinnov analysis of global top 1000 R&D spenders 12

13. Telecom & Networking vertical witnesses significant contributions from all sizes of the
companies, though mainly in North America & Europe
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Telecom & Networking
Telecom & Networking Vertical by Geography Vertical by Geography and Revenue Ranges (USD)
28 1
APAC
Arrows indicate the change in
10.9%
3 number of companies from
NA year 2006-07 to 2009-10
35.9% 1
4
20
EU
46.2% 7
Japan 2
6.9% 1
21 9
2
12 1
Company Geography 3
Nokia Europe 6 1
Cisco Systems North America 2
Alcatel-Lucent Europe
NA EU APAC Japan
Ericsson Europe
1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Motorola North America
Source: Zinnov analysis of global top 1000 R&D spenders 13

14. North America and Europe completely dominate R&D spending in the Aerospace & Defense
vertical with contribution from small, medium and large sized companies
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Aerospace Vertical by
Aerospace Vertical by Geography Geography and Revenue Ranges (USD)
ROW
1.8% 15
15 3
Arrows indicate the
2 2 change in number of
companies from year
NA
2006-07 to 2009-10
43.5%
EU 3
54.3% 4
Japan
0.4%
10
9
Company Geography 2
1
EADS Europe
2
Boeing NA 1
Finmeccanica Europe
NA EU Japan ROW
United Technologies NA
Thales Europe 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Source: Zinnov analysis of global top 1000 R&D spenders 14

15. Japanese and European corporations account for more than 80% of the R&D spending in the
Automotive vertical
Distribution of R&D Investments Top 1000 Companies in Distribution of Top 1000 Companies in Automotive Vertical by
Automotive Vertical by Geography Geography and Revenue Ranges (USD)
ROW APAC
0.0%
0.1% NA 4.1%
26 1
14% Arrows indicate the
23 change in number of
EU 6 companies from year
36.6% 2006-07 to 2009-10
2
9 3
Japan 15
45.2%
2
1 3
8
17
1
12 11
Company Geography 1
7
Toyota Motor Japan 1
Volkswagen Europe 1
General Motors NA NA EU Japan ROW APAC
Honda Motors Japan
Daimler Europe 1 - 500 Mn 500 Mn - 1 Bn 1 - 10 Bn 10 Bn+
Source: Zinnov analysis of global top 1000 R&D spenders 15

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