The World Intellectual Property Organization (WIPO) defines a patent as “an exclusive right granted for an invention. In other words, a patent is an exclusive right to a product or a process that generally provides a new way of doing something or offers a new technical solution to a problem.”
Therefore, patenting an idea or innovation is crucial to securing and converting a company's research and development (R&D) efforts into potential economic gains.
Here’s an overview of the patent landscape in 2021 with rankings based on the data by IFI Claims Patent Service.
Trend: 2016 to 2021
IBM continues to lead the way
IBM (IBM), popularly referred to as the Big Blue, has been leading the U.S. companies for decades in the number of patents received annually. The year 2021 was no exception with IBM marking the 29th consecutive year of patent leadership. The company received 8,682 patents in 2021, a 5% decline from the previous year. In terms of the cumulative patent holdings globally, IBM ranked eighth with 41,937 active patent families. The entry of six Chinese entities pushed IBM down from the second spot in 2020 to the eighth position in 2021. Since 1920, IBM has received more than 150,000 U.S. patents.
IBM’s patent portfolio is in sync with its vision for the future, which the company believes “will be powered by a blend of high-performance computing, AI and quantum computing, all integrated through the hybrid cloud.” IBM’s strategic investments over the years in advanced technologies have improved its competitive position and profit dynamics. IBM sees hybrid cloud and artificial intelligence (AI) as the two next great shifts in the technology landscape and is positioning itself to play a key role in this massive transformation. According to IBM, its “R&D operations differentiate it from its competitors.” The company has been investing approximately 9% of its total revenue in R&D, focusing on “high-growth, high-value opportunities.”
Samsung is steady in the second spot
Samsung (SSNLF) continues to rein at the second place with 6,366 patents awarded during 2021, marginally down by 1% as compared to the previous year. In terms of cumulative patent holdings, Samsung is the world leader with 90,416 active patent families. The South Korean conglomerate Samsung is the largest non-U.S. spender on R&D. Samsung spent ₩21.11 trillion during FY2020, which constituted 8.9% of its sales. During the first nine months of FY2021, ₩15.93 trillion was spent on R&D activities.
Samsung’s research is guided by its vision to "shape the future with innovation and intelligence." Core research areas include AI, data intelligence, robotics, next-generation communications and media, life care and new experiences, and security. Samsung operates three levels of R&D organizations, the first being a business unit development team that works on market ready technologies with a 1–2-year outlook, the second being the research institute that develops mid- to long-term technology with a 3–5-year outlook, and the third being the Samsung Advanced Institute of Technology that develops core technology as seeds for future growth engines. In August 2021, Samsung announced an investment of $206 billion in the next three years to expand its footprint in biopharmaceuticals, AI, semiconductors and robotics in the post-pandemic era.
Canon takes the third spot
With 3,021 patents, Canon (CAJ) ranked third for the number of U.S. patents awarded in 2021. Canon has ranked in the top five for the number of patents granted for 36 consecutive years. Canon, a well-known global brand of Japanese origin, is a leading provider of consumer, business-to-business and industrial digital imaging solutions. The company has retained the number one spot among Japanese companies for the 17th consecutive year. When seen in terms of cumulative patent holdings, Canon holds the ninth position (from third in 2020) with 40,706 active patent families.
Canon is focusing on four key business areas, which include commercial printing, network cameras, medical and industrial equipment. In addition, the company is working to create new business in the fields of next-generation imaging, next-generation healthcare and smart mobility.
The company’s R&D expenses were ¥272,312 million in FY2020, equivalent to 8.6% of net sales. In the first nine months of FY2021, the company spent ¥211,010 on R&D. Canon has been allocating 8-9% of its net sales to R&D expenses over the years. Canon believes that “new products protected by a robust patent portfolio will not easily allow competitors to surpass them and will give the company an advantage in establishing standards in the market and industry.”
TSMC enters the top five at position four
Taiwan Semiconductor Manufacturing (TSM) entered the top five patent holders in 2021. TSMC was awarded 2,798 patents during the year. Back in 2020, when majority companies witnessed a drop in patents in 2019, TSMC registered a 22% growth and moved up from the 12th place in 2019 to be at the sixth spot.
TSMC is the world’s leading dedicated semiconductor foundry dominating more than 55% of the market share: “Built the world's largest semiconductor design ecosystem, Open Innovation Platform, and collaborated with its partners to form the most powerful force of semiconductor innovations—about 85% of worldwide semiconductor start-up product prototypes were enabled by TSMC.”
TSMC reported a revenue of NT$1,587.42 billion in FY2021, an increase of 18.5% compared to the same period in FY2020. The company continues to spend 8-9% of the revenue on R&D. In April 2021, TSMC announced its plans to invest $100 billion over the next three years to increase capacity at its plants. In November 2021, the establishment of a subsidiary of TSMC in Japan with a minority shareholding of Sony Semiconductor Solutions Corporation was announced. The construction of the subsidiary named Japan Advanced Semiconductor Manufacturing (JASM) will begin in 2022, with production targeted to begin by the end of 2024.
Huawei takes a jump to enter the top five
Chinese companies have shown a spectacular rise of 10% in the number of patents awarded in 2021. Huawei moved up by four places to make its place among the top five in 2021. It was in the ninth spot in 2020. Huawei was awarded a total of 2,770 in 2021 as compared to 2,761 patents in the previous year.
Huawei is a leading global provider of information and communications technology (ICT) infrastructure and smart devices. While the company is yet to report its final revenue for FY2021, a note at the start of 2022 by the company’s chairman mentions that Huawei “expects to round off the year with a total revenue of ¥634 billion.”
Over the years, Huawei has been investing over 10% of its sales revenue back into R&D; its R&D spending constituted 15.9% of its total revenue of ¥891.37 billion in FY2020. The number of people working in the company’s R&D constitutes more than half of its total workforce. The company has three guiding principles when it comes to ecosystem and industry development—growing in the industry, working together and sharing value. Huawei has partnered with major industry players to innovate in emerging domains such as cloud computing, 5G and the Internet of Things (IoT).
Rounding up the top ten
Intel (INTC) slid to the sixth place. INTC was placed at the fourth spot during 2017 and 2018 and then at the fifth place during 2019 and 2020. Intel received 2,615 patents during 2021, a drop of 9% since 2020.
Apple (AAPL) moved one place up with 2,541 patents during 2021 despite a 9% fall in patents awarded during the year. The company had witnessed a 12% increase in patents during 2020, taking the tally to 2,791 patents.
With 2,487 patents, LG Electronics is at the eighth place, one rank down compared to 2020. The number of patents awarded to LG experienced shrunk by 12% during the year.
Microsoft (MSFT) witnessed a sharp fall from the fourth spot to the ninth in 2021. The company received 2,418 patents in 2021, experiencing a 17% fall from 2020.
Despite a 6% drop in patents received during 2021 as compared to the previous year, Qualcomm (QCOM) retained its spot among the top ten. The company received 2,149 patents during the year.
In percentage terms
The top five names that have seen the biggest percentage increase in patents are:
- Advanced New Technologies made a whopping surge of 696%. The company was awarded 98 patents in 2020, which increased to 780 patents in 2021.
- Guangdong Oppo Mobile Telecommunications witnessed a 33% rise receiving 719 patents during the year.
- Saudi Arabian Oil (Saudi Aramco) registered a 28% increase with a grant of 836 patents in 2021.
- Raytheon Technologies (RTX) ended the year with 788 patents, registering an increase of 18%.
- Micron Technology (MU) moved up four places and 17%. The company was awarded 1,789 patents during 2021.
Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in it are totally unintentional. Data on patent is based on IFI Claims Patent Services report. Company specific data based on earnings and annual reports.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Prableen Bajpai
Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.
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