Apple R&D spend breaks $10B barrier in 2016 after $350M increase in Q4

article thumbnail

AppleInsider is supported by its audience and may earn commission as an Amazon Associate and affiliate partner on qualifying purchases. These affiliate partnerships do not influence our editorial content.

Apple spent nearly $2.6 billion on research and development operations during the fourth fiscal quarter of 2016, bringing the company's yearly total to more than $10 billion for the first time ever, regulatory filings show.

Noted in a Securities and Exchange Commission filing published on Wednesday, Apple spent $2.57 billion on R&D during the three-month period ending in September, up $550 million from the same time last year. The figure represents more than 5 percent of the company's net sales for the quarter.

The quarterly outlay brings Apple's R&D commitment for 2016 to more than $10 billion, a 25 percent bump from $8.1 billion in 2015. Apple's commitment accounted for 5 percent of total net sales for the year, as compared to 3 percent in both 2014 and 2015.

As usual, Apple attributes the year-over-year growth between 2015 and 2016 to new hires and related expenses. Interestingly, the company hired only 6,000 people in 2016, suggesting a bulk of R&D monies went toward expansions of existing projects.

In an earnings conference call on Tuesday, CEO Tim Cook said Apple continues to heavily invest in R&D and acquisitions. During the fourth quarter, for example, Apple purchased four smaller companies.

Apple failed to mention where, exactly, the R&D money was applied, though rumors throughout 2016 pointed to explosive growth of an automotive initiative dubbed "Project Titan." At one point, the secret program was expected to yield a full-fledged autonomous car, though recent reports suggest executives had a change of heart after running into unforeseen obstacles. Under new project lead Bob Mansfield, Project Titan has shifted focus away from a proper car toward backbone autonomous vehicle technology.

The cost of international R&D centers likely goosed balance sheet figures, as Apple over the course of 2016 announced plans for new Chinese facilities in Shenzhen and Beijing, as well as the expected completion of a center located in Yokohama, Japan.

Beyond R&D, Apple reported total operating expenditures of $24.2 billion, or 11 percent of net sales, up 8 percent year on year. Capital expenditures reached $12.8 billion in 2016, a figure expected to swell to some $16 billion in 2017 as Apple builds out manufacturing facilities, data centers, corporate buildings and retail operations.