How much do Apple's factories cost?

I am not sure of the writer's intent, but this is a very strange way idea that, as written, suggests that Apple is spending in an inefficient way:

"In the twelve months ended June, Apple will have spent $2.9 billion in M&E to manufacture 118 million iOS devices. To put that in perspective, Nokia, which manufacturers a large (if not majority) of the 340 million phones it sells, expects full year 2011 capital expenditures of $1.1 billion. Correcting for amortization and depreciation and deducting some spending on Mac M&E, it’s very likely that Apple spent twice as much as Nokia on the instruments of production for one third the number of devices."

There is another, better interpretation that can be given to the facts: Apple's level of investment is high because it believes it will experience dramatic growth in the near future, and Nokia's level of investment is low because it does not expect dramatic growth in the near future.

This bit is an especially odd bit of reasoning:

"it’s very likely that Apple spent twice as much as Nokia on the instruments of production for one third the number of devices."

Investment in production facilities are investments that are aimed at the future, whereas how many units you've sold so far is a reflection of what you've done in the past. What Apple is investing in the future says nothing about what it has paid so far to produce its iPhones and iPads. Building up production facilities is more expensive than maintaining them.

Imagine you have 2 companies, A and B. Imagine A has a great decade where it dominates its industry, but then in the next decade is falls into decline, and starts to lose market share. Imagine B sleeps through the first decade but then takes off and has stellar growth during the second decade. What sort of investment patterns would you expect to see in that second decade? Clearly, you would expect investment from A to be declining, and investment from B to be rising. But A probably built up some impressive production facilities back when it was doing well, and it can coast on those production facilities for awhile. It can continue to produce large amounts of units, without investing a lot more in new facilities.

My point is, one has to be careful when drawing a relationship between present levels of investment and how many units a company can build. Past investments in production can allow a company to coast a long time. Building up production facilities is more expensive than maintaining them.

Apple must have one of the biggest fleets of cnc machines in the world to mill all their aluminum MacBooks, iMacs, remotes, keyboards... And the steel bands on the IPhone. I remember reading they bought 1000 Fanuk CNC's when they came first came out with the MacBook unibody in 2008, and they have grown a lot since then.

I seem to remember an Apple earnings call, around the time of the iPad launch, where they disclosed that they were spending $1 Billion+ on some undisclosed manufacturing facilities in China.

At the time it seemed to me that they were investing in touch-display capability to ensure their production demands for the iPad display.

All that cash Apple has in the bank... I wonder if it's primarily there to make sure Apple can comfortably ride out another global financial crisis (and then clean up as the competition drop like flies).

I found the article to be really flimsy. What about costs associated with Apple buying tons of servers the last few years (for iTunes, for iCloud)?

I wonder about the implications this has with regards to human rights issues: Apple has always dismissed allegations of human rights violations with the argument that it's basically not their direct responsibility and that it's their suppliers' duty to adher to their supplier code of conduct.

Now if they own their suppliers, that argument suddenly wouldn't really be persuasive.

The human rights story comes to mind because I read this piece the other day and the description of the "man whose right hand was permanently curled into a claw from being smashed in a metal press at Foxconn" has remained vividly in my imagination: :-(

http://www.nytimes.com/2011/10/06/opinion/jobs-looked-to-the...