Apple Outspends Competitors For Exclusive Deals On Unique Supply Chain Machinery

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By now you should know that it takes an incredibly complex, efficient system to build Apple products overseas, assemble them, and ship them thousands of miles to then show up at your doorstep in the arms of a friendly mailman. Apple’s attention to detail extends outside of its Cupertino HQ to every area its business touches, including the machinery that makes the products overseas.

For 2014, Apple has committed to spending a record $10.5 billion on new manufacturing technology, according to a new report. Apple outspends all of its competitors to get exclusive deals on unique machinery that is needed for its product designs. 

Bloomberg reports that the spending will go towards “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.”

Tim Cook was Apple’s head of Operations before he became CEO, and now the current head of Operations, Jeff Williams, is continuing to grow the company’s presence in the supply chain under Cook’s guidance.

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

In his new book on Jony Ive that’s coming out tomorrow, Cult of Mac Editor-in-Chief Leander Kahney explains how Apple’s supply chain process is dictated by Ive and his design team. The needs that Apple’s Industrial Design group come up with are what determine the machinery Apple will build to make its products.

When I asked Leander about the influence Ive and his team have on Apple’s manufacturing process, he said that the supply chain is “totally shaped by their needs.” Apple started heavily investing in custom tooling equipment with the unibody MacBook in 2009, and spending has rapidly increased every year since then. High-end laser drills, CNC-milling machines, friction stir welding equipment (formerly used for space rockets), and industrial robots are custom ordered, and some of the machines cost over $1 million each.

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  • Market_Mayhem

    It almost seems like a waste of money. Most consumers are happy with cheap, plastic Android devices because they’d rather just save their money for other things. Apple is spending all that money on equipment and yet most of the critics say that Apple products are no better than products half their cost. Apple continues to lose market share on both smartphones and tablets so Apple isn’t seeing any gains for their added costs. Apple’s share price remains relatively flat so there’s no recognition from Wall Street for Apple’s costly expenditures. As an Apple shareholder I’d sure like to know when any of this cost is going to pay off.

About the author

Alex HeathAlex Heath has been a staff writer at Cult of Mac for three years. He is also a co-host of the CultCast. He has been quoted by places like the BBC, KRON 4 News, and books like "ICONIC: A Photographic Tribute to Apple Innovation." If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Twitter always works too. All DMs excepted.

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