Bernstein analyst Toni Sacconaghi believes that Apple's increase in capital expenditures is going towards tooling equipment for Samsung, Sharp, and Toshiba factories, reports FORTUNE.
Apple is projecting $7.1 billion spending in 2012 on non-retail capital expenditures. Sacconaghi describes that as "staggering by any measure" and notes that it:
● could hypothetically be used to construct two modern chip fabrication facilities from scratch;
● exceeds the last twelve month capital expenditure of all but 3 of the large technology companies that we examined; and
● represents a 78% Y/Y increase and more than a 9-fold increase over the last three years.
Sacconaghi suggests that a major of the increase in expenditures will be used in the "operations area, particular tooling."
We estimate that the majority of Apple's FY12 non-retail capital expenditure ($3.8B - $5.8B) will fund tooling equipment dedicated to Apple's use but residing in supplier facilities, as in the case of tooling used to manufacture unibody enclosures for Macbooks. The machinery will be carried on Apple's balance sheet, and used to produce components exclusively for Apple. We do not believe the machinery is at its ODMs [original design manufacturers] (i.e. Hon Hai). Instead, the high level of capital expenditures points to partners in one or more areas of key component manufacturing: NAND, displays and/or processors. Likely partners include Sharp, Toshiba and Samsung.
Read More
Apple is projecting $7.1 billion spending in 2012 on non-retail capital expenditures. Sacconaghi describes that as "staggering by any measure" and notes that it:
● could hypothetically be used to construct two modern chip fabrication facilities from scratch;
● exceeds the last twelve month capital expenditure of all but 3 of the large technology companies that we examined; and
● represents a 78% Y/Y increase and more than a 9-fold increase over the last three years.
Sacconaghi suggests that a major of the increase in expenditures will be used in the "operations area, particular tooling."
We estimate that the majority of Apple's FY12 non-retail capital expenditure ($3.8B - $5.8B) will fund tooling equipment dedicated to Apple's use but residing in supplier facilities, as in the case of tooling used to manufacture unibody enclosures for Macbooks. The machinery will be carried on Apple's balance sheet, and used to produce components exclusively for Apple. We do not believe the machinery is at its ODMs [original design manufacturers] (i.e. Hon Hai). Instead, the high level of capital expenditures points to partners in one or more areas of key component manufacturing: NAND, displays and/or processors. Likely partners include Sharp, Toshiba and Samsung.
Read More