• What's Apple Spending $4 Billion On?

    During the earnings call yesterday, Apple Chief Financial Officer Peter Oppenheimer and current Chief Operating Officer Tim Cook both mentioned that the company had sealed $3.9 billion US worth of contract deals ensuring that they would have access to components over the next two years. Though Cook kept the details of the deals secret because it is "something I don't want our competition knowing," he said it was "focused in an area that we feel is very strategic," and compared it to Apple's earlier decision to pre-purchase a billion dollars of RAM. Some observers are speculating that the deal is for components related to the anticipated Retina Display for iPad 2.

    In 2005, with the iPhone and iPad still on the drawing boards, Apple paid $1.25 billion to Hynix, Intel, Micron, Samsung and Toshiba to guarantee supplies of NAND flash memory through 2010. As a result, Apple was able to push out millions of iPhones, iPods and iPads even through frequent supply shortages. Cook compared this new prepayment to that deal, saying "We think that was an absolutely fantastic use of Apple's cash," and the company "constantly look[s] for more of these." In one acknowledgement that may provide a hint, he said that "in the past several quarters, we've identified another area and come to recent agreements."

    Oppenheimer said in his remarks that Apple paid out $650 million under its agreements for this mystery part this past quarter, and that the company is planning to spend another $1.05 billion in payments next quarter. The industry has been buzzing with rumors of deals with Toshiba and Sharp, which are both LCD vendors. Oppenheimer noted that the prepayments were for "these payments consist of both prepayments and capital for processes and tooling," which would be consistent with a new high-res screen - something that Apple could legitimately call a "Retina Display" - in a 9.6-inch form factor. With the supply of flash memory guaranteed, and rumors of high resolution displays leading the list of expected announcements for the iPad 2, it's not unreasonable to think that Apple may have gone a long way towards cornering the market for LCD components.

    Source: AppleInsider
    This article was originally published in forum thread: What's Apple Spending $4 Billion On? started by Paul Daniel Ash View original post
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