Apple boosted its R&D budget by $1.5 billion amid rumours that it is making a car
Capital expenditure will decline by $1 billion to $12 billion, according to an SEC filing.
The capex reduction makes some sense given that the previous fiscal year was a big one for Apple: The larger-size iPhone 6 and 6 Plus models are now launched, as well as Apple Watch. In the upcoming year Apple is likely to only upgrade the software on those models and to tweak the hardware marginally, in the form of an iPhone 6S and iPhone 6S Plus, and an updated operating system for the Watch.
The Wall Street Journal interpreted the tea leaves this way:
A company spokeswoman said Apple lowered the forecast because it was able to spend more efficiently for tooling equipment and facilities. "There are no changes in our product plans," she said.
But what are those "plans"? There is a clue in Apple's 2015 spending on Research and Development: That budget increased by $1.5 billion to $5.9 billion in the first nine months of 2015. Apple may be cutting its new manufacturing expenditure now but it sure looks like it is pouring resources into more stuff for the future. Perhaps an electric car! Apple has made several hires recently that suggest it will launch new products in the automotive market.
"The Company 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," Apple said in the SEC filing.
Here's a chart of Apple's capex from Asymco analyst Horace Dediu:
