The prominence of major Asian clusters in the electronics industry has made them attractive for research and development (R&D) operations. All but one of the 20 most competitive locations to set up an electronics R&D centre are located in Asia, according to an assessment conducted using fDi Benchmark, an investment location comparison tool.

Seoul, the South Korean capital which is home to the large research campuses of domestic champions including Samsung and LG Electronics, ranked as the world’s most competitive location for electronics R&D activities. It was followed by Chennai in India and the two Chinese megacities of Guangzhou and Shenzhen.


Istanbul came fifth, making it the only European location to place in the top 10, thanks in part to its well developed ecosystem of electronics companies. Three Indian cities – Bangalore, Pune and Gurgaon – along with Penang in Malaysia and Japan’s capital Tokyo, made up the remainder of the top 10. 


R&D is of paramount importance for enhancing existing technology and developing new products, helping to boost the competitiveness of companies and economies alike. This has been reinforced now that electronics underpin almost every device and system in use today. 

The fDi study, which benchmarked the world’s top 100 FDI destinations in the electronic components industry, assessed each location’s cost and quality competitiveness for R&D activities. In essence, it indicates the best locations for a modelled 50-person electronics R&D centre occupying 2000 square metres of office space.

East Asian locations occupied the top five positions in terms of quality, with Seoul coming out on top, followed by Tokyo and three Chinese cities, Shenzhen, Guangzhou and Shanghai. This reflects their well-developed electronics industries and the prioritisation of R&D within their economic development strategies. 

For example, the South Korean government has invested in IT infrastructure for decades and rolled out R&D tax incentives to multinationals and chaebol (domestic family-run conglomerates). This has enabled the likes of Samsung and LG to become world leaders in memory chips, displays and smartphones.


According to the fDi Benchmark assessment, Chennai was the cheapest location in the top 100 electronics FDI destinations, with estimated annual operating costs of $1.24m for a 50-person R&D centre, followed by Penang in Malaysia ($1.32m) and other Indian cities Gurgaon ($1.53m) and Pune ($1.53m). 

Despite being cheaper than other locations, India remains at the lower end of electronics value chains. Prime minister Narendra Modi has made the encouragement of research and innovation in the semiconductor and electronic components industry a national priority.

Expensive technology hubs in developed economies fared worse than their Asian counterparts in the fDi Benchmark study

“India has always been known for low-tech products … but has future potential. There is no comparison between what is [currently] being designed and worked on in India versus places like China, Japan and Korea,” says Mark Burr-Lonnon, senior vice president for global service at Mouser Electronics, a US-based global electronics distributor that supplies parts to design engineers.

Despite skilled talent and top-notch infrastructure, expensive technology hubs in developed economies fared worse than their Asian counterparts in the fDi Benchmark study. These included Munich, where annual operating costs for a 50-person electronics R&D lab are estimated to be $6.22m, alongside Paris ($7.48m), London ($9.36m) and San Francisco ($9.93m).

This article first appeared in the February/March 2022 print edition of fDi Intelligence. View a digital edition of the magazine here