iPhone 5S (Martin uit Utrecht 001)

Apple’s 10-Q filing with the United States Securities and Exchange Commission shows purchase commitments for the March quarter dropping from $4.5 billion two quarters ago to just $904 million. Of course, two quarters ago Apple was ramping up iPhone 5 production and investing heavily in then new in-cell touch displays. Still, that’s a huge drop.

One clever interprets this data point as a sign of the iPhone 5S not needing new manufacturing processes, in turn proving it’s gonna look just the same as the current-generation iPhone 5. Notable changes will be from the inside, like the speedier CPU/GPU, better cameras and what not. Man, I should have been an analyst…

Morgan Stanley analyst Katy Huberty stated the obvious in her note to clients (via BusinessInsider, emphasis mine):

Lower planned purchases of production equipment sets up for higher iPhone 5S margin. The 10-Q discloses $904M of commitments for equipment purchases compare to $4.5B just two quarters ago when Apple invested in new in-cell touch displays for the iPhone 5.

The decrease is likely due to iPhone 5S not requiring significant hardware changes, therefore iPhone GM could be much higher in C2H13.

She also says Apple stands poised to secure better deals on NAND components going forward, pointing to the recently unveiled 128GB iPad 4, due tomorrow.

Apple typically issues a major iPhone redesign every two years. Each mid-cycle refresh is basically a specs bump up. As the current iPhone 5 design debuted in September 2012, a major face-lift shouldn’t be expected this year.

iPhone 5 and iPhone 5S backplate (ETrade Supply 001)

Apart from a few leaks here and there, not much is known about the iPhone 5S.

Per usual, the rumor-mill churns out a number of theories, ranging from wild predictions of a jumbo-sized iPhone to the iPhone 5S in colors to a substantial speed increase via the A7 chip and a 13-megapixel camera.

Apple’s 10-Q (PDF document) also states a whopping $10 billion in capital expenditure this fiscal year, a $2 billion increase year-over-year. By comparison, Intel dedicated up to $12.9 billion in capital expenditure and Samsung’s semiconductor cap ex stands at $12.2 billion.

Finance boss Peter Oppenheimer told investors on a conference call that Apple will invest “a little bit under $1 billion in retail stores“.

And the other $9 billion?

This will go “in a variety of areas”, but mostly on manufacturing equipment for new products:

We’re buying equipment that we will own that we will put in our partners facilities.

Nine billion dollars on equipment in just twelve months is a lot of money, even by Apple’s standards.

Maybe Apple is switching to Liquidmetal?

iPhone 5 Liquidmetal concept (image 001)

If you ask experts, mass-scale manufacturing of this alloy is at least five years away so Liquidmetal is the least possible answer.

Another (and likely) possibility: Apple could be looking to update the look of most of its products throughout the year. And don’t forget the ongoing expenses on iCloud enhancements.

Oh, and that Project Azaela, too.

Of course, there’s also that constantly looming third option: a standalone TV set, requiring new plants and a bunch of new manufacturing equipment.