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Date: 18-10-13

AMD, Altera, ADI are top 3 semiconductor innovators by patent metric

Thomson Reuters has published its latest "The top hundred most innovative companies in the world" . As usual the semiconductor and electronics companies have dominated the list. Around 40% of the Thomson Reuters' top hundred most innovative companies are into electronics engineering, which includes semiconductor and electronic components, computer hardware and telecommunication equipment. Thomson Reuters' ranking is based on patents metrics. These days there are some opinions in the industry that every innovation may not require patenting, it is better to explore the market opportunity rather than technology patenting. So in that sense the company which is not ranked in this list might be innovating but have not patented all of its inventions. However to some extent patent based ranking signifies and validates the innovation capabilities of the companies.

In the semiconductor domain, the top three innovators are processor chip maker Advanced Micro Devices, FPGA maker Altera and analog/mixed signal, MEMS and DSP device maker Analog Devices. The world's number one semiconductor chip maker Intel is ranked 7th among the semiconductor companies in this innovation ranking, but is continue to report better revenue growth compared to many of the semiconductor companies which are ranked above Intel in Thomson Reuters innovation ranking. So there is something to analyse, holding a lot of patents always does not convert into profit. Patents have become more of a strategic asset to block the competitor/competition in some markets.

Another good example is FPGA innovation. The world's biggest FPGA maker Xilinx is ranked last among the semiconductor companies in this Thomson Reuters' ranking compared it's competitor Altera, which is ranked far higher than Xilinx, but in market performance Altera ranked lower in FPGA market based on revenue earnings. Same logic applies to Analog Devices, Texas Instruments and ST Microelectronics, where Analog devices is not that better performer in market compared to Texas instruments and ST Microelectronics.

If you take further macro view, Semiconductor and electronic components companies are not top performers in the stock market and in the overall economy. The reason for increased patenting of technologies in semiconductor domain is to prevent the new players entering this market. When Taiwan strategically invested in the semiconductor domain in early 80s, TSMC and UMC did not had enough patented technologies to make their own chips, so that gave birth to the semiconductor foundry services business model. Over the years, TSMC has worked so hard and has created and invented its own technologies to take the number one spot in semiconductor manufacturing. TSMC is rankled 22nd in this year's Thomson Reuter' top 100 most innovating companies.

For product start-ups who are powered by innovation, the challenge is to raise the bar of innovation far ahead of established players, whether you patent your technology or not, however patenting is always safer. The good example is Tesla Motors, they have designed the electric car which outperforms the competition in all aspects of car use. Among the established as well as start-ups, Apple always stands high in consistent innovation irrespective of its revenue performance.

To see the full list of new Thomson Reuter top 100 most innovative companies in the world visit the page http://top100innovators.com/

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