Apple shells out $3.9 billion to keep the spice flowing

It’s good to be the king. Not content with raking in truckloads of cash and being among the world’s highest-valued companies, Apple is now throwing its weight around to secure supply of display panels for the iPad and iPhone families… to the tune of $3.9 billion.

iSuppli reports Apple spent that much in long-term supply agreements with LG, Sharp, and Toshiba’s display manufacturing arms. The $3.9 billion covers "inventory component prepayments and capital expenditures during a two-year period," and iSuppli reckons Apple may be providing cash the three companies "can use to invest in the production of IPS and LTPS LCD panels."

The market research firms adds that Apple is paying up to avoid shortages amid the fast-growing smartphone and slate markets. Explains iSuppli’s Vinita Jakhanwal:

With sales of smart phones booming, and a flood of new entrants into the tablet market this year, competition among original equipment manufacturers (OEMs) for available supplies of high-end small and medium displays has reached a fever pitch, straining availability of critical types of displays. Because of this, Apple has moved to invest some its enormous cash reserve in securing the supply of advanced displays.

Enormous those cash reserves are. According to the Wall Street Journal, Apple has $50 billion in cash on hand. With that kind of money, the Mac maker seems to be in a unique position to sidestep component shortages—something its smaller competitors might be hard-pressed to do.

Comments closed
    • paulWTAMU
    • 9 years ago

    So, if Apple is the House Harkkonen, who is the Atredies?

      • shaq_mobile
      • 9 years ago

      Microsoft! Oh… crap.

    • HisDivineShadow
    • 9 years ago

    This is to pay these companies in advance for the “retina”-class displays for next year’s iPad.

    • Thanato
    • 9 years ago

    Paying extra to “avoid” shortages… hmmmm

    • Ricardo Dawkins
    • 9 years ago

    So, no Super AMOLED or Super AMOLED+ ?

    hahahaha…poor ifanbase getting shafted again with these old tech.

    From my Samsung Galaxy S.

      • mcnabney
      • 9 years ago

      Those IPS screens on the iPad still make the current (and future) pads/slates look like crap. Like the soon to be released Xoom. Awesome device. El-crappo screen.

    • maxxcool
    • 9 years ago

    Tragic. everyone is bashing or defending… am i the only one laughing at the Dune reference ?

      • dpaus
      • 9 years ago

      No, I’m still giggling at the image of a skinny Sting with Jobs’ head but still with Sting’s maniacal grin 🙂

      • ew
      • 9 years ago

      Could Steve Jobs be the Kwisatz Haderach? Maybe he’s on medical leave so he can go drink some water of life?

        • dpaus
        • 9 years ago

        He’s certainly convinced that he’s the only mentat.

          • maxxcool
          • 9 years ago

          LOL!! loveee it…

      • Barbas
      • 9 years ago

      I’m rereading the original Dune these days, so no you’re not the only one. So is Apple the Fremen here?

        • dpaus
        • 9 years ago

        No, they’re clearly House Harkkonen

          • anubis44
          • 9 years ago

          Yes, Steve Jobs is the Baron Harkkonen. He likes to walk around Apple headquarters and pull out employees’ heart plugs if they’re not working ‘hard enough.’ He certainly does want to control the spice production, and is clearly willing to occupy Arrakis to do it. He’s angling to become the Padishah Emperor, a position currently occupied by Steve Balmer and his increasingly incompetent Sarduakar troops (Microsoft employees).

      • BobbinThreadbare
      • 9 years ago

      I didn’t really think it was a funny reference.

        • maxxcool
        • 9 years ago

        Must not be a Sci-Fi fan … bummer

      • jburnsid
      • 9 years ago

      He is the Queasy Hatrack!

      • Cuhulin
      • 9 years ago

      No, I was wondering about the same thing — only about the addiction aspect of it — keeping people addicted to Apple.

      • funko
      • 9 years ago

      sandworms caused much stress in my life in dune 2

        • mutarasector
        • 9 years ago

        Aren’t nano-sandworms what produced the sandybridge flaw? I heard that a “wormsign defect” in a sandybridge photomask was determined to be the cause.

      • burntham77
      • 9 years ago

      Oh no, I got that. But it was more of an eye roll than a knee slap.

    • jjj
    • 9 years ago

    Apple has $59.7 billion cash not $50 billion.

      • blastdoor
      • 9 years ago

      at the rate it’s growing, you can hardly blame anyone for getting it wrong 🙂

    • BoBzeBuilder
    • 9 years ago

    Apple Tax. They has your moneys.

      • Firestarter
      • 9 years ago

      There is no such thing as Apple Tax, you’re paying extra for the quality and service that owning an Apple product implies. That mountain of cash Apple is sitting on is not made of your cash at all, really.

        • jstern
        • 9 years ago

        I paid an insane am mount of money for a new macbook with out dated components, ended up with a machine with a swelling battery, with cracks all over even though I always had on my desk connected to a monitor. If you don’t think Apple makes a lot of money by selling old technology at a premium, then I don’t know what to say. Hey, I’m not knocking them, it’s smart. I just recognize that they’re willing to take advantage of the fact that a lot of people will buy their products no matter what. The ipad has 256mb or ram, I forgot about that.

        Edit: The other annoying fact is that, for example, Steve Jobs might say something like, “Apple is always at the top, with the latest an most powerful technologies…” and then newspapers around the world would reprint that. Meanwhile they’re selling core2duo machines for hundreds of dollars more than machines with a more modern CPU.

          • Corrado
          • 9 years ago

          Engineering, design, and materials are not free. 1 swollen battery does not represent the whole. I’m also willing to bet that you took it to the store, and they gave you a new one/repaired it no questions asked.

            • jstern
            • 9 years ago

            Oh, I guess I should mention that the problems that I had with the swollen battery, the cracking plastic was not an isolated problem, but one that I’m guessing all the MacBook owners of the time also had. If you search for white MacBook on eBay and read up the description, you would find that virtually all of the MacBooks that they are selling have the exact same problems that I had, since it was a design flaw. The swollen battery represented the whole.

            It’s funny how the brain works. I sold that MacBook on ebay last summer, but writing about it made me raise my left arm off of the palm rest of my current laptop, because the swollen battery affected the track pad, and just lightly touching it would register as a click, thus making it impossible to type because it would take you off your current position. So many problems on that model, yet sooooo many people are willing to pay extra for a used one on ebay, despite all of those problems. And there are a lot more that I didn’t mention.

            • mutarasector
            • 9 years ago

            I guess your MacBook’s cracking plastic exhibited what could also be called “Worm sign”, eh?

            (Just trying to keep in sync with the Dune reference in the thread title.) 🙂

            • StashTheVampede
            • 9 years ago

            ^^^ THIS ^^^

            Users that had cracked cases, swollen batteries and bad nvidia GPUs were fixed/solved. Just like my G5 iMac and Intel iMac that died — Apple just replaced and fixed. Apple does take care of the end user, there are simply too many stories that indicate this.

            • jstern
            • 9 years ago

            They didn’t fix mine. I could have gotten the plastic on the palm rest fixed for free after the warranty, but not the cracks on the back. And I don’t think they replaced the batteries either. I also love how a lot of Apple fans brag about how they would fix it, under warranty (like most company) and then later start talking about how the Macs never break, have no problems, best design, etc. Like the seem to brag a lot about how Apple fix this and that, which shows how many time these computers break down. I still go to Apple website and re up on them, there’s always something that needs to be fix, from tinted screen, too audio issues that can easily be fixed with a patch, but Apple won’t do anything about it until over 8 months later.

            • StashTheVampede
            • 9 years ago

            My iMac G5: well dead beyond the warranty and it was fixed (there was a recall that carried me several years out).

            My iMac 24: 100% dead in about 6 months time. Complete swap and xferd my data (for free, woot).

            Your issues (plastic body) were well documented and I know several users got replacement parts from Apple, but it was definitely an overall problem with the plastic bodies (at the time). Apple certainly isn’t perfect (I won’t defend them to that degree), but they keep making changes for the end user.

            Even for the price (lol appletax), I’d still consider a Mac over an HP/Dell/Sony because of the things it delivers for end users: magsafe, better multi-touch trackpad, etc.

            • srg86
            • 9 years ago

            “(lol appletax)”

            If other devices prices go up because apple is doing deals and using up all the component supply then yes I would call that an apple tax.

            • WaltC
            • 9 years ago

            Makes exactly as much sense as the “Windows tax” illiterates love to rail on about…;) There’s no question that Macs are overpriced and underpowered, but Apple’s Macs have always been so. Macs are designed and sold with the n00b in mind–and as we all know, in any given year there are plenty of n00bs in the market who are susceptible to Apple’s brand of incomplete and often deceptive marketing. The “Mac versus PC” ads that Apple does are a great current example of this fraudulent advertising–which is fraudulent [i<]because Macs are PCs these days[/i<] and the only company adverse to its customers knowing that is Apple. My beef with Microsoft is that they responded in kind to Apple's extremely stupid "Mac versus PC" ads. They should have ignored Apple's fraudulent advertising instead of engaging it. It's obvious that Microsoft ad people are too young to know which way is up...:D That's a shame.

            • sweatshopking
            • 9 years ago

            You can’t ignore something that’s kicking your ass as bad as those ads were. yes they were lies, the one about virus’ comes to mind, but they worked.

            • Deanjo
            • 9 years ago

            I know for a fact that the repair of the cracking issue always involves a complete case replacement. Same thing goes for the palmrest discoloration.

            • kroker
            • 9 years ago

            If engineering, design and materials would cost so much, then Apple wouldn’t have those insane profits. That’s what everyone means when they talk about “Apple tax”. Every other manufacturer has to pay for engineering, designs and materials too, but they can still sell their products at well beneath Apple prices. Also, I’m pretty sure other manufacturers give you replacements/repair the broken part under warranty… OK, maybe Apple has a somewhat better customer service than others (I honestly don’t know because I’ve never owned an Apple product), but that’s the least they can do for their insane prices!

            Whether Apple products are worth it or not for what they offer, whether the Apple tax is justified, depends on every customer’s needs and is really not the issue here; but please don’t try to say that those prices are not inflated and that they’re justified by design/engineering/manufacturing costs – Apple’s profits speak for themselves.

          • indeego
          • 9 years ago

          We have a 2.5 year old HP laptop (still under warranty) that does not hold a charge. While the warranty for the battery expired (it only lasts a year,) HP refused to send a new battery. I can understand that batteries degrade over time–and I wouldn’t complain if the battery lasted even 30 minutes–but the laptop essentially is useless as a laptop without a battery that holds a charge.

          All companies suck. Apple probably sucks a tad less in the support department. I could see them replacing my battery in this instance. Especially if I was a business customer that spent tens of thousands a year with them.

            • nafhan
            • 9 years ago

            It’s actually pretty normal for a lithium ion battery to degrade after a couple years (especially if you leave it plugged in all the time), that’s why the battery specifically has a shorter warranty. If you have a product that had a fairly short battery life to begin with, the fact that it won’t hold a charge is not surprising at all.

            From wiki:

            [quote<]A Standard (Cobalt) Li-Ion cell that is full most of the time at 25 °C (77 °F) irreversibly loses approximately 20% capacity per year. Poor ventilation may increase temperatures, further shortening battery life. Loss rates vary by temperature: 6% loss at 0 °C (32 °F), 20% at 25 °C (77 °F), and 35% at 40 °C (104 °F).[/quote<]

      • BobbinThreadbare
      • 9 years ago

      Yet they have higher margins any any other PC manufacturer.

    • bthylafh
    • 9 years ago

    Could someone explain what an LTPS display is?

      • stdRaichu
      • 9 years ago

      Low-Temperature Polycrystalline Silicon transistors.

      [url<]http://en.wikipedia.org/wiki/Polycrystalline_silicon[/url<]

Pin It on Pinterest

Share This