Apple's Astounding Capital Expenditures

Apple’s most recent 10-K filing with the U.S. Securities and Exchange Commission shows the company has budgeted $11 billion in capital expenditures for fiscal 2014.

This is more than 5 times Apple's capital expenditure in 2010 and 57 percent more than the $7 billion it spent in 2013.

What is Apple planning to do with all that additional money?

According to Horace Dediu perhaps Apple is just conducting business as usual and the increased CAPEX simply reflects potentially higher sales volumes for iOS devices in 2014. He has a chart that tracks capital expenditure against iOS device volume and they track very closely. But I think the relationship may be somewhat coincidental.

Consider Apple's desire to move away from Samsung. Be it on displays or in chips, I suspect this strategic direction is increasing CAPEX significantly without any corresponding unit sale increases.

I also suspect the new campus has a significant impact. In addition we must consider the data centers Apple has been building over the last 2 years to support it's cloud services - clearly not production related CAPEX.

Logically a portion of 2014 CAPEX is going to new device development and production - the iPhone 6 will very likely have a new form-factor and design. The iPod line needs a refesh. But the iPad Mini and iPad Air in my opinion will remain as is in 2014. So is the iPhone and iPod enough to drive CAPEX up that strongly? I doubt it.

Earlier this week, Apple Chief Executive Officer Tim Cook said the company is working on new releases in technology categories where it doesn’t yet compete. So perhaps an iWatch or an iTV is what is driving this spend. But maybe there is something really revolutionary coming. Personally I want to be surprised and amazed in 2014 - just like when the original iPhone was introduced back in 20007.