Apple Opens New Development Center in Israel

Apple Inc. (NASDAQ:AAPL) has decided to open a development center in Israel focusing on semiconductors. The decision to open the center came even before the company entered into talks to acquire Anobit Ltd., Herzliya-based flash storage solutions provider. Apple is large globally, but is rather small in research and development. In 2010, they only invested 2% of its revenue in research development, considerably less than other tech companies. Apple only has one development center and it’s at their headquarters in Cupertino, Calif.  The new center will be the first outside of headquarters.

The company has hired Aharon Aharon to head the new center, along with Amir Beeri-founded Camero Tech Ltd., a company that develops Radio Frequency based imaging systems. Prior to this, he was Chairman of embedded security solutions developer Discretix Inc. and managed their Israel development center. Before that, he was VP of Operations at Zoran Corp.  Aharon is expected to spend several months at Apple’s headquarters before heading up the new Israel center.

Vice President of Research and Development Ed Frank is currently at the new Israel center. Frank spent most of the last ten years at Broadcom Corporation (NASDAQ:BRCM), where he has managed communications chips activities and research and development.

The company’s strategy is to order components ahead of time. This requires more capital, but allows Apple to neutralize seasonal fluctuations in demand and to keep prices from rising. The rewards can be seen in its profit margin, which is 40.5% of revenue.  This is why the company wants to acquire Anobit.  The Anobit memories are already in Apple products and will save them 10-20% on purchases of the memories.

Apple made a number of acquisitions in 2010 compared to previous years.  The company acquired Intrinsity, swift processors developer, on which it has based its iPad A4 processors. Intrinsity and Anobit have both cooperated with Samsung, which is in an IP legal battle with Apple and is its main competitor for global domination in smartphones and tablets.