UK electronics R&D internationally under par -

UK electronics R&D internationally under par

London UK — Research by many electronics and related quoted UK companies tends to be less when compared with their international competitors according to the Department of Trade and Industry's R&D Scoreboard issued today (Monday 20th).

The research is segmented on which classification companies appear under on the Stock Exchange so while Oxford Instruments and Roxboro appear in the Electronic and Electrical section, ARM, Bookham Technology and Filtronic are listed as IT Hardware companies.

For all sectors the research shows that companies that invest heavily in R&D have outperformed the rest of the stock market in recent years. The overall share value of the ten most R&D-intense companies on the FTSE 100 has been higher than the FTSE 100 index every year since 1997. A portfolio of shares bought in those companies would no be worth 30per cent more than in 1997, in contrast to the 15per cent drop in the value of the FTSE 100 index in the same period.

The UK IT hardware sector has an R&D intensity (R&D as % sales) of 10.3%, similar to the international intensity of 10.0%. However, the UK sector is proportionately smaller, accounting for only 6.2% of UK R&D (down from 8.2% in 2002) compared to 21.7% internationally (25.1% in 2002). The largest change in the UK was a 48% reduction in R&D at Marconi (the UK's top IT hardware investor) where sales fell by 54% over the previous year.

There are 17 UK IT hardware companies with R&D spending over £10m p.a. and eleven of these are UK-owned.

The international IT hardware sector saw sales drop by 11% over the previous year with R&D dropping a little less at 10%. The UK sector sales dropped by 34% and R&D by 31% mainly due to sizeable decreases in both sales and R&D at the largest three companies.

The UK electronic & electrical sector accounts for only 3.7% of UK 700 R&D compared to 10.4% internationally. There are 9 UK electronic & electrical companies with R&D over £10m per year and 4 of these are UK owned — Invensys, Spectris, Renishaw and Oxford Instruments.

The average R&D intensity for the UK electronic & electrical sector is 2.6% compared to 6% internationally. The average Capex intensity (Capex as % sales) for the UK sector is 2% compared with 5.1% internationally.

The international sector has seen sales unchanged from the previous year and R&D down 3% whereas the UK sector has sales down 13% and R&D down 5%.

Internationally, the electronics & electrical sector is very patent-active with an average of 7 U.S. patents granted in 2002 per £10m R&D investment — the highest ratio of any sector.

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