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Apple's $10.5B manufacturing tech forecast linked to exclusive deals

updated 10:10 am EST, Wed November 13, 2013

Heavy investments needed for products like iPhone 5c, MacBook

Apple's forecast of $10.5 billion in capital expenditures for fiscal 2014 is partly based on exclusive machinery deals, sources say. To support its unusual designs, the company has had to invent its own manufacturing technology and/or buy specialized machines. This includes units that can polish the plastic on the iPhone 5c, and test camera lenses for iPhones and iPads; perhaps the best known examples are the laser and milling machines needed to craft the unibody aluminum frames for MacBooks. When it announced the iPhone 5, Apple highlighted the special technology used to produce chamfered edges that can now be found on the iPhone 5s, iPad Air, and iPad mini.

Sources explain that Apple's manufacturing initiatives typically begin inside the industrial design team lead by Jonathan Ive. Ideas devised in that group are brought to the hardware engineering division, which starts to develop large-scale means of getting a product built, since the processes for some Apple products have previously only been used for small product quantities. Engineers may spend weeks at a time at Asian facilities making sure that the parts and equipment Apple buys are working as expected. The company has previously hired robotics experts, and is currently hiring engineers who can run advanced manufacturing hardware.

Bloomberg notes that this process contrasts with most companies, which usually let contract manufacturers figure out how to mass-produce a design. The Apple method is said to be very time-consuming and expensive, but sometimes necessary. One source points out that when the iPhone 4's then-new gyroscope technology was in development, there was no commercially-available equipment for testing it on the scales Apple needed, which prompted the company to build it itself.



By Electronista Staff
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  1. iphonerulez

    Fresh-Faced Recruit

    Joined: 11-28-08

    It's really a shame. Apple puts all that time and effort into their products and mostly it seem to be going for naught. Consumers would much rather buy those cheap, plastic Android products that can be stamped out by the millions with little effort. Android device sales are continuing to rise at almost unheard of rates while Apple product sales have basically flatlined. Neither Apple or Apple shareholders are seeing any returns from that capital expenditure. Even the tech industry says that Apple products lag far behind Android products so I'm not exactly sure who's getting any benefit from it. It's not as though consumers are running out and buying Apple products because of the care that's put into building those products. I think, to most consumers, a $400 Apple device is seen as no better than a $200 Android device. Wall Street certainly doesn't value Apple any better because Apple tries to build better products for consumers. It seems to be a losing game for Apple and Apple shareholders any way you look at it. Consumers don't seem to care whether they buy junk products or not.

  1. BigJayhawk

    Fresh-Faced Recruit

    Joined: 11-08-11

    Yeah, that is why Apple has among the largest (if not THE largest) Market Cap in the world. Mercedes and BMW should just close up shop too because "the masses" would rather buy a Chevy by your analysis???

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