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Dutch electronics giant Phillips is cutting back on research and development.

At last week’s annual meeting at the company’s head office in Eindhoven,
Philips’s president Jan Timmer confirmed that R&D staffing has been
cut by 5000 this year to 27 400, with funding reduced from 7.9 to 6.8 per
cent of turnover.

Philips has always boasted that its high investment in R&D secures
the company’s future. It was spending in the past which now earns Philips
a royalty of 3 cents (US) on every compact disc record sold anywhere in
the world.

Timmer says the cutback is mainly the result of Philips’s decision to
pull out of the Mega Project, a scheme to make 1-megabit static RAM chips
in Europe. ‘It was very staff-intensive,’ Timmer explained. ‘We are convinced
that we still have the research capacity needed to invent all the new products
that need to be invented.’