Apple Ramps Up R&D Spending In A Big Way

Friday, December 14, 2012

Since last year, Apple has dramatically spent more on research and development.  Speculation is that they are moving to start producing their own chips as CEO Tim Cook pushes for integration across the company's value chain.
Last year in their financial quarter ending June 2011, Apple spent less than $1 billion on property, plants, and equipment. By March 2012, the number had spiked beyond $2 billion, beyond $3 billion, and approached $4 billion.

Horace Dediu thinks that number will zoom past $4 billion in 2013.  According to him this represents an "extraordinary evidence of an extraordinary shift in strategy."  Apple is now spending along the lines of Samsung for research.

According tot the Business Insider, the interesting part about all this massive spending is that no one outside of Apple knows where it's going.

"The capital is being deployed almost silently and, though vast in scale, barely gets a mention from analysts," writes Dediu. "Not even a single question has been raised at any earnings call about this spending."

His theory is that Apple, which prefers an "integrated" approach in everything it does, will soon make more of the components inside its gadgets, like chips.  This falls in line with the company's CEO, Tim Cook.

That would explain why Apple has been so busy hiring former Texas Instruments employees, for example.

To be honest, Apple is a very secretive company and it doesn't have to say, specifically, where it's spending that money. However, everyone is well aware that Apple is always working on products that would cannibalize its current lineup.

According to Dediu the pattern represents "increasing commitment and engagement in parts of the value chain as part of a continuous evolution of Apple’s role. Furthermore, it’s something that should be seen as a signal of a new era in how technology companies operate. We see hints of “vertical integration” with Microsoft building hardware, and Google buying Motorola and Amazon selling devices. Apple did all these things and now it casts an eye over the next frontier: components."

SOURCE  Business Insider Top Chart - ASYMCO

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