Worldwide spending on semiconductor research and development (R&D) grew 12% in the first quarter of 2008 compared to the first quarter of 2007, according to researcher IC Insights.

Semiconductor R&D amounted to $10 billion in the first quarter of 2008 or 17.5% of semiconductor sales in the quarter. In 2007, integrated device manufacturers (IDMs), fabless semiconductor companies, and pure-play wafer foundries spent $45.7 billion on R&D and related engineering activities for new semiconductors, says IC Insights.

Industry-wide R&D expenditures grew 8% in 2007 from $42.5 billion in 2006. R&D and engineering expenditures as a percent of semiconductor sales rose to 17.9% in 2007 from 17.2% in 2006. In contrast, R&D expenditures as a percent of semiconductor revenues averaged 14.9% between 1990 and 2007.

In the first quarter of 2008, IDMs collectively spent 17.9% of revenues on R&D and related engineering activities, while fabless semiconductor suppliers averaged 25.1% of sales on R&D and engineering costs in the first quarter of 2008, according to IC Insights. Meanwhile, pure-play silicon foundries spent only 7.1% of total sales on R&D and engineering expenditures in the first quarter.

With next-generation IC processes becoming more expensive to develop and IC design costs exploding, R&D and engineering budgets have increased at a faster rate than the industry's sales growth since the early 1990s.