Apple sinking more money into R&D as spending rose $1B in 2012

Posted:
in General Discussion edited January 2014
In Apple's 10-K filing with the SEC, it was revealed that the company increased spending on research an development by almost $1 billion, representing a nearly 40 percent increase from one year ago.

Apple on Wednesday outlined the significant bump in its SEC filing, noting that it had increased research and development spending by 39 percent, or $953 million, during the 2012 fiscal year to hit $3.4 billion.

The nearly $1 billion boost in R&D compares to growth of $600,000 during fiscal 2011 and $500,000 in fiscal 2010.

The massive increase in spending is likely the result of a multitude of new Apple products unveiled throughout the year. Most notable among the new devices, and perhaps most costly to rollout, are the iPhone 5 with its new A6 processor, the 13- and 15-inch MacBook Pro with Retina display (< a href="http://appleinsider.com/articles/12/10/30/review-apples-13-inch-macbook-pro-with-retina-display/page/5/">1, 2), the iPad mini and the totally redesigned iMac. Apple's iPod line, Mac mini and 9.7-inch iPad also received iterative refreshes.

iPhone 5 Chamfer
Unique milling process creates a chamfer around the iPhone 5's perimeter. | Source: Apple


From Apple's filing:
[Apple] continues to believe that focused investments in R&D are critical to its future growth and competitive position in the marketplace and are directly related to timely development of new and enhanced products that are central to the Company?s core business strategy. As such, [Apple] expects to make further investments in R&D to remain competitive.
While Apple has incrementally increased its R&D investments over the past three fiscal years, the spending continues to represent only a small portion of overall expenditures and an even smaller percentage of net sales. For example, in 2010 R&D represented only 3 percent of net sales, while 2011 and 2012 saw a decrease to 2 percent.

Overall, Apple's capital expenditures for 2012 came out to $10.3 billion, with retail accounting for $856 million, while $9.5 billion went to "other" expenses including product tooling and manufacturing. For the upcoming fiscal year, the company said it anticipates spending to drop to $10 billion.
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Comments

  • Reply 1 of 72
    desuserigndesuserign Posts: 1,316member
    I remember in the nineties I was amazed Apple could spent $1 million/day on R&D. Now, at $3.5 billion a year, it's nearly $10 million/day.

    "I wanna get me some of that, yeah . . ."
  • Reply 2 of 72
    iqatedoiqatedo Posts: 1,595member


    I wonder whether Apple is working towards a fully automated production chain?

  • Reply 3 of 72


    Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

  • Reply 4 of 72


    Originally Posted by MiddleGuy View Post

    Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.


     


    Which you know, of course, since you… 


     


    What, exactly?

  • Reply 5 of 72
    But "Apple never invented anything" /s
  • Reply 6 of 72
    russellrussell Posts: 296member


    "The growth in R&D expense was driven by an increase in headcount and related expenses to support expanded R&D activities."


     


    It's about time they paid their people more.  Everybody in Silicon Valley knows Apple salaries are not that competitive for the amount of work you do.

     

  • Reply 7 of 72


    Originally Posted by Suddenly Newton View Post

    But "Apple never invented anything" /s


     


    "Wow, why does a company that exists only because of marketing spend any money on "research" or "development"? I guess it's research into new sales lies and development of new false advertising techniques." image






    Originally Posted by Russell View Post

    …Apple salaries are not that competitive for the amount of work you do.



     


    Putting a dent in the universe should be its own reward.

  • Reply 8 of 72
    russellrussell Posts: 296member

    Quote:

    Originally Posted by Tallest Skil View Post




     


     


    Putting a dent in the universe should be its own reward.



     


    Yeah right. Tell that to Bob Mansfield.  Oh, and why don't you apply for a job there and tell them you'll do it for less than anybody else.

  • Reply 9 of 72


    Shouldn't the tile read


    "Samsung, Asus, HP, etc. R&D sees a boost as Apple sinking more money into R&D as spending rose $1B in 2012"

  • Reply 10 of 72
    solipsismxsolipsismx Posts: 19,566member
    middleguy wrote: »
    Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

    I don't disagree that more could be better but to make such a specific claim should be backed up with a detailed explanation as to how you derived that figure.

    iqatedo wrote: »
    I wonder whether Apple is working towards a fully automated production chain?

    Only if they convert Foxconn workers to Cybermen.

    http://upload.wikimedia.org/wikipedia/en/5/59/Cyberman_-_Army_of_Ghosts_episode_(2006).jpg

    (Huddler not allowing me to post a photo from my phone)
  • Reply 11 of 72

    Quote:

    Originally Posted by Tallest Skil View Post


     


    Which you know, of course, since you… 


     


    What, exactly?



     


    Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

  • Reply 12 of 72
    solipsismxsolipsismx Posts: 19,566member
    russell wrote: »
    It's about time they paid their people more.  Everybody in Silicon Valley knows Apple salaries are not that competitive for the amount of work you do.

    Why, because thy can? Those employees also have te choice to work for another company. If they can get more money from everybody else in Silicon Valley and that is their sole thing they look for in a company then they should seek employment elsewhere.

    I know I'd take a substantial pay cut to work at Apple's upcoming HQ onpared to the same work for MS, Nokia, RiM, Samsung, Sony, Acer, HP, Dell, Asus, et al. I et many hear would to because there are many other actors that make a job fulfilling than your salary.
  • Reply 13 of 72
    irelandireland Posts: 17,547member
    They should watch QC too.
  • Reply 14 of 72
    irelandireland Posts: 17,547member
    middleguy wrote: »
    Apple should spend more money on R&D. 2% is too small. It should be minimum 5%.

    Apple never throws money at a problem, and they seem to making great decisions for the past 5 years, so...
  • Reply 15 of 72
    analogjackanalogjack Posts: 1,064member


    Sounds like Apple is going to be bringing out some game changing SoC's in the future.

  • Reply 16 of 72

    Quote:

    Originally Posted by MiddleGuy View Post


     


    Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.



    Actually 2% is brilliant if you consider the amount of innovative devices coming out of cupertino. 

  • Reply 17 of 72
    middleguy wrote: »
    Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.
    So the amount of money as a % of revenue is the only thing that matters? Samsung makes a gazillion products compared to Apples focus on a few products. And chip making is inherently expensive which explains Intel , Qualcomm and AMD spending more.

    Apple is also more profitable. If you run a highly efficient company you can make those R&D dollars go further. Judging based on % alone is asinine.
  • Reply 18 of 72
    All of those companies also make components, which they use as economies of scope. Therefore, it is more profitable to spend more on R&D, since they are selling their parts to Apple and other companies, whereas Apple is a buyer of components to make their products.
  • Reply 19 of 72
    jonoromjonorom Posts: 293member


    The increase in R&D may be influenced by legacy, continuing, and probably growing R&D spending at recent acquisitions C3 Technologies (mapping, 8/11), Anobit (flash memory, 12/11), Chomp (search, 2/12), and AuthenTec (security, 7/12). These are all areas that Apple is highly motivated to invest in.


     


    I would not ascribe it to R&D for manufacturing processes, although R&D to create a nice bevel takes SOME work, I guess. But most of that R&D will likely be born by the machine tool manufacturer. Apple says "we want to do such and so" and the machine tool guys say "great! We'll look into it."

  • Reply 20 of 72
    jragostajragosta Posts: 10,473member
    middleguy wrote: »
    Intel spent 17% R&D spending, Qualcomm 21%, AMD 22%, TI 13%, Toshiba 16%, TSMC 8%, Samsung 8%,......... and Apple 2%. It's lame.

    Here's a clue: Apple is not Intel. Apple is not AMD. Apple is not Qualcomm.

    Microprocessor manufacturing is extremely expensive. Designing a new case is not. Furthermore, there's the matter of efficiency. Apple is extremely efficient with their R&D expenditures. At some point, spending more money is wasted - as you end up with duplicated effort and waste.

    In the end, the only thing that matters is results. Apple has something like 10% of the mobile phone business and the entire industry is scrambling to copy them. Apple completely reinvented the personal music player business. Apple completely reinvented the mobile phone business. Apple completely reinvented the tablet business. Apple reinvented the ultralight computer business. Apple is in the process of reinventing casual gaming. So Apple's R&D expenditures appear to be more than adequate.

    Ultimately, Apple is in an infinitely better position to determine how much money they should spend on R&D than you are. Calling their expenditures lame when they've reinvented so many industries is merely evidence that you don't know what you're talking about and/or you are mindlessly attacking Apple without any evidence to back you up.
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