Friday, November 15, 2013

Top Story

Apple invests record $10.5B in manufacturing tech (video)

Apple is spending $10.5 billion on new manufacturing technology, from assembly robots to milling machines.

Apple is investing heavily in the machines that mass produce iPhones, iPads and other devices. That includes gadgets to polish the new iPhone 5c's plastic, laser and milling machines to form the MacBook's aluminum body, and testing gear for the iPhone and iPad camera lens, according to anonymous sources with the inside scoop on the company's manufacturing method.

The investment, which Apple outlined in its fiscal 2014 capital-expenditure forecast, highlights how the company is intent on designing and inventing technology for its manufacturing process.

Apple is striking multiple exclusive machinery deals, said people familiar with the work, outspending rivals on the tools, then placing them in the factories of suppliers, many of which are in Asia.

"Their designs are so unique that you have to have a very unique manufacturing process to make it," said Muthuraman Ramasamy, an analyst with consulting firm Frost and Sullivan. "Apple has so much cash that they can invest in cutting-edge, world-class machinery that is typically used for aerospace and defense."

CEO Tim Cook is funneling money back into the business as sales growth has weakened with competition from Samsung and others. Designing a manufacturing process has been a long-term part of Apple's strategy, and has become more urgent since the company's FY2014 capital expenditures (excluding retail spending) are up 61 percent from 2013 and ten times higher than they were in 2008.

The $10.5 billion Apple has forecast for fiscal 2014 capital expenditures is a fraction of its $171 billion in sales last year, and some of the money is going toward building its new headquarters in Cupertino, California. Samsung, which has projected about $22 billion in capital expenditures this year, is the only competitor outspending Apple, according to data compiled by Bloomberg.

For more of the Bloomberg story: businessweek.com

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