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Wednesday, November 13, 2013

Apple is Spending $10.5 Billion to Improve Its Supply Chain





Apple has forecasted $10.5 billion in capital expenditures for 2014 which will be used to purchase equipment to bolster its supply chain, according to Bloomberg.

To get a jump on rivals like Samsung Electronics Co. and lay the groundwork for new products, Apple is spending more on the machines that do the behind-the-scenes work of mass producing iPhones, iPads and other gadgets. That includes equipment to polish the new iPhone 5c’s colorful plastic, laser and milling machines to carve the MacBook’s aluminum body, and testing gear for the iPhone and iPad camera lens, said people with knowledge of the company’s manufacturing methods, who asked not to be identified because the process is private.

Apple is increasingly striking exclusive machinery deals, say people familiar with the company's plans. Apple outspends its competitors on the tools, then places them in the factories of its suppliers.

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

Although $10.5 billion is a staggeringly large amount, Samsung is spending over double that. Samsung has allocated $22 billion in capital expenditures this year and is the only company to outspend Apple. In comparison, HP spent $3.7 billion last year and Sony spent $3.7 billion.

Notably, GT Advanced Technologies just announced a $578 million deal with Apple to produce sapphire material for the company.


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