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Apple's Revolutionary Move Into Robotic Manufacturing

Jun. 14, 2012 5:15 AM ETAAPL, NOK, SSNLF, ABBNY, RIO, BHP, CAT, ISRG, HTCKF, SIEGY18 Comments
Keith Woolcock profile picture
Keith Woolcock

Apple (AAPL) is about to become one of the world's biggest buyers of industrial robots. The company has announced a 78% increase in its non-retail capital expenditure to $7.1bn. Analysts in Asia and America believe that the size of Apple's robot purchases could tie up the market for several years, making it difficult for companies such as Samsung (OTCPK:SSNLF), Nokia (NOK) and HTC (OTC:HTCXF) to compete.

Up to 700,000 people are employed in China, making products like the iPhone and iPad for Apple. It takes 141 steps to make an iPhone and each iPad will, over the course of the 5 days that it takes to build it, pass through 325 pairs of hands. Although labor only represents about 3% of the cost of building these products for Apple, the wages of Chinese factory workers have been rising at about 15% a year for much of the last decade. Problems managing this workforce have also harmed Apple's image in a region that has become the most important engine of its growth.

Apple's move represents an important step in the use of robots in manufacturing. Robots have long been used to build cars, but not so widely used in consumer electronics because these products are more difficult to make.

The main beneficiary of Apple's move will be Fanuc, the world's leading robot maker. However, other firms, such as ABB (ABB) and Siemens (SI) may also benefit. Apple is also buying a large number of computerized machine tools. While Apple will own these tools and the robots will be installed in the plants of its leading contractors, Hon Hai and Foxconn.

Apple is not the only consumer electronics giant planning to move to robotic production. Canon, one of the world's leading camera makers, has just announced that it will shift production of cameras back from

This article was written by

Keith Woolcock profile picture
I write The 5th Column, a weekly research product which goes to a number of institutional clients around the world. I seek to supply my clients with heretical opinions and facts that can give them a more informed view of the world. 5th Columnideas is completely independent and therefore does not have to provide research that requires the approval of corporate financiers, or dissenting colleagues.

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Comments (18)

casselp_2000 profile picture
Is it true that the Chinese lead in organic robots? AKA people? Just that it seems their attitude seems to be that they can grow more manufacturing capacity than anybody else could invent...
....and treat them as robots, yes?
....but robots/androids don't strike or riot, you say? 'nuff sed.
Gee that's great. 700,000 Chinese are employed by Apple. Soon worlds more advanced factory (if it isn't already) will be in China.

You think we could use 700,000 good jobs in the USA? A new factory? At the least tax these Chinese made gadgets with an import tax.

Why is none of this discussed in the debates?
I saw the production line for the first Bondi blue iMac in 1998 in Singapore . The whole line was controlled by Apple's own software running on beige G3 computers. Soon those beige boxes were replaced by blue iMacs for the next gen of iMacs. It looked fantastic. Then they moved to China.
Value chain is defined by final assembly, remember auto manufacturers might a assemble in US but all the money is in the parts not made in the US. Also, the synergy of subcontractors and prime is rich in China very hard to duplicate.

So robotics will improve efficiency and Apple owning technology and robots will be huge competive advantage. Not much of a US jobs opportunity.
casselp_2000 profile picture
Interesting... I'd like to know whose electronic components go into the build of these cunning robots. Could be a ground-level buy stockwise.
So what do we do with all the people replaced by robots?
Herr Hansa profile picture
Nice overview, other than you seem to miss that Samsung do not contract out manufacture of their phones. They are actually a manufacturer.


Samsung also have a very large share of the component market. A large percentage of smartphones contain components made by Samsung.
KenC profile picture
Fanuc is probably a good guess as I'm pretty sure Foxconn, aka HonHai, installed about 1000 Fanuc robots, purchased by Apple a few years back to mill unibody cases for MacBooks.

The more Apple roboticizes the more likely they could bring some manufacturing back to the US. That'll be interesting to watch. Also, remember, back in the early 80s, Steve Jobs was incredibly proud of a fully automatic computer assembly line they built near Cupertino.
KenC If AAPL brought the manufacturing back to the USA, would they not be subject to our confiscatory tax rates? Why do it (even though I think it would be great for the country). Who would have thought that companies would be looking to save labor costs in China? Nothing stays the same.
Infinite loop profile picture
Very informative article Keith....... Nice work.
davel profile picture
Thanks for the article.

I did not know Apple was pushing more robots into their process.
remurraymd profile picture
Bullish for (AAPL) . Folks who travel know why they are the aspirational brand of design of Tech and the world thanks to
Steve Jobs and Sir Jono Ive. Gene Munster of Piper has them taking 10-14% more up to almost 40% of world smart phone share from Sammy/Android in the next 3 years.50 million iPhone5s to be sold in this years refresh largest in world history target $910.500% increase in China iPhone sales.Tim Cook has an engineering degree from Auburn and it shows making brilliant acquires. Long lots of Apple a long time bought some @ $570 3 days ago sold to open cash secure PUTS SEP 515 strike @$1830.00/contract into close yesterday.98% chance we keep the cash or 2% chance we get long more Apple @ $497. So win win.for us.
arel profile picture
14 Jun. 2012
A US robotics company that might be of interest is Adept Technology
(ADEP). Even though it is a micro cap, their IP is interesting as is the range of products. PHG's decision to use ADEP's technology for their consumer electronics assembly plant is somewhat of a validation of their technical expertise.
Their weakness appears to be that the company has been run for many years as an "engineers toy store". Supposedly that is now changing.
"....Apple's robot purchases could tie up the market for several years, making it difficult for companies such as Samsung (SSNLF.PK), Nokia (NOK) and HTC (HTCXF.PK) to compete."

They already have an apparent monopoly on creativity, a firm lock on the supply chain, and momentum. Nokia today trading below 2 euros, lopping off 10K employees (20% workforce). RIM taking on water. It's astounding. I can't really come up with a good analogy for Apple... elephant in the room seems too minuscule. More like elephant in the elevator. They cannot be ignored anywhere they suddenly appear. Wow. Just wow.
michiganjake profile picture
With the exception of the above point, you have written a wonderfully informative and interesting article.
Charles Margolis profile picture
I completely agree. I had not heard of this.

Found it commenting on a new SA article. Just thinking what Apple could do because that author thinks Apple could go to 1T Market Cap.


I believe Apple needs a new must have product in order to do that. Though iPhone and iPad are wildly successful a new one every 3 quarters or so will continue to bring in a lot of money.

Really it'd be nice to see Apple take a stake in Intuitive Surgical as you point out here. Like Amazon did in Kiva. Like what if in the future Apple had a device that could e-mail you (and if you choose emails your primary care physician) to see your cardiologist because it picks up on warning signs.

It need not be the Apple iMonitor (either wearable or just something you could keep on your bed stand.)

It could be the Intuitive iMonitor -- that was created through Apple investment.... Apple already has an initiative for Science and Medicine, though... that'd be great if they could go in and wipe out more and more things like myocarditis, etc. etc. (and do it cost effectively, and in a cool way. I suppose iPod could have an app. that does something similar since it is wearable.. in close proximity to the person or with sensitive microphones it could pick up on the heartbeat.)

Though the next step is to pick up on other conditions like Cancers, strokes, etc... and alert people to see doctors before the conditions worsen. I suppose since it's not entertainment it may not be as popular. However by keeping people healthy, longer, you wind up with more consumers who spend longer and can buy more.
GSlusher profile picture
"... what happens in South Korea is likely to find an echo in South Korea. "

Could you clarify that sentence? It doesn't make any sense. Perhaps the first "South Korea" should really be "China."

"However, South Korea is still a long way behind when it comes to using and designing robots, just as Samsung lags Apple."

Isn't that redundant?
Keith Woolcock profile picture
apologies, that is a mistake. it should read, what happens in Japan finds an echo in south korea
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