What Is Apple Spending Billions On In 2012? Futuristic Chip Factories And Retooling Samsung Are Both Possibilities [Report]


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In an intriguing note, a Wall Street analyst suggests Samsung — you know, the South Korean company keeping Apple’s legal department in yachts and private islands — could be one of the beneficiaries of $3.4 billion Apple will spend to retool suppliers’ factories in 2012. Or Apple could just build itself a couple of state-of-the-art chip factories from scratch.

Apple says it plans to spend the billions next year on non-retail capital expenditures, which Sanford Bernstein’s Toni Sacconaghi believes largely is aimed at the “operations area, particularly tooling.” Key components, such as unibody enclosures, flash memory, LCD screens and chips are all possible targets of Apple-funded retooling. The tools won’t end up in mega-assemblers, such as Hon Hoi’s Foxconn, but in smaller component makers, including Sharp, Toshiba and Samsung.

What could Apple do with what the analyst describes as a “staggering” amount of spending? One possibility Sacconaghi offers is that the Cupertino, Calif. company could build two chip manufacturing plants from the dirt up. Even if Apple decides to turn to its frenemy Samsung for iPhone and iPad chips, the company could outspend all but three technology firms and increase its own capital expenditures nine-fold.

Besides the long history of courtroom fights with Samsung — 20 IP lawsuits spanning nine countries, according to one account — Apple has an odd relationship with the Korean smartphone and tablet maker. Not only does Samsung make devices that compete with the iPhone and iPod, it also produces LCD screens, memory and processors for those same Apple products. Earlier this year, we reported the pricetag on the weird relationship between the two firms is expected to reach $7.8 billion.

  • Jon

    Let’s hope they roll out Liquidmetal machines. That would be the ultimate retooling.

  • Gesturthor

    I think they will spend the money to get app store and itunes store to europe south america. Also they might build more apple store’s in south america and europe.

  • Ed Kim

    Creating your own chip factories for Apple is a pipe dream.  Apple couldn’t even manage a chip design firm and you think they can create a chip factory out of thin air?  Chip manufacturing is CAPITAL INTENSIVE.  A bad word if you care about your margins and Apple does care about it’s margins.  The more likely solution is to invest in a Chinese or Taiwanese chip manufacturer that has no aspirations for making any proprietary product themselves, help them become as competent as Samsung.  That won’t be easy.  Apple gave Taiwan Semiconductor a trial run at making the A6 and they clearly didn’t perform as desired as we now know that the new big A6 contract went to… you guessed it…. Samsung.  Making a lot of complex custom chips cheaply and reliably is not easy and it is best handled by experts and we all know that being an expert doesn’t happen overnight.

  • Len Williams

    Yes, Samsung makes chips and screens for the iPhone and iPad. Where do you think they got all the good ideas for their phones and tablets?

  • Frank Lowney

    Samsung will fold or be plowed under.

  • Frank Lowney

    Apple has the fabless capability.  Adding the fab is simpler.