Late last month Apple announced rather significant increase in its capital expenditures for the ongoing fiscal year without doing a lot of explanations. As it now appears, whopping $10.5 billion will be spent to acquire various manufacturing equipment, including assembly robots. Given the amount of money to be invested, it is likely that the company is not only expanding production capacities, but getting ready for new product introductions.
Apple anticipates to utilize approximately $11.0 billion for capital expenditures during fiscal 2014, including approximately $550 million for retail store facilities and approximately $10.5 billion for other capital expenditures, including “product tooling and manufacturing process equipment, and corporate facilities and infrastructure, including information systems hardware, software and enhancements”. By contrast, in FY2013 the company spent $7.0 billion during 2013, consisting of $499 million for retail store facilities and $6.5 billion for other capital expenditures
According to Bloomberg news-agency, $10.5 billion will be spent on production equipment that will be installed in facilities run by such companies as Foxconn Electronics and Pegatron as well as others. It is highly likely that the tools will be installed into facilities located in different parts of the world, including China and the U.S.
Keeping in mind that next year Apple is expected to further broader the lineup of its products by adding new smartphone designs, a new iPad design as well as launch Apple TV and Apple iWatch devices, boosting CapEx seems to be a rather logical move.
The news-agency claims that the equipment to be bought includes assembly robots (which replace human assemblers), milling machines (which carve aluminum bodies for MacBook PCs), polish machines (that refine plastic bodies and components), various testing gear and many other tools.
“Their designs are so unique that you have to have a very unique manufacturing process to make it. Apple has so much cash that they can invest in cutting-edge, world-class machinery that is typically used for aerospace and defense,” said Muthuraman Ramasamy, an analyst with consulting firm Frost & Sullivan.