IT is fashionable to say that tech firms will conquer the financial services industry. Yet in the case of Apple, it seems that the opposite is happening and finance is taking over tech by stealth( 悄然 ). Since the death of Steve Jobs, its co-founder, in 2011, the world’s biggest firm by market value has sold hundreds of millions of phones with bionic chips ( 仿生芯片 )and know-it-all digital assistants. But it has also grown a financial operation that is already, on some measures, roughly half the size of Goldman Sachs. Apple does not organize its financial activities into one subsidiary, but Schumpeter has lumped them together. The result—call it “Apple Capital”—has $262bn of assets, $108bn of debt, and has traded $1.6trn of securities since 2011. It appears to be run fairly cautiously and is part of a thriving firm, but it still deserves scrutiny. Companies have a history of being hurt by their financial arms; think General Electric (GE) or General Motors (GM). Apple Capital has lots of responsibilities but three stand out. It invests the firm’s mountain of surplus profits, mainly in “highly rated” instruments (this task seems to fall to Braeburn Capital, a subsidiary in Nevada, which uses some external fund managers). Apple Capital also uses derivatives ( 衍生品 )in order to protect the firm against currency and interest-rate gyrations. And it manages America’s fifth-biggest corporate-debt pile by issuing Apple bonds as part of an elaborate strategy to limit tax bills. Apple Capital has become important to its parent. Since Jobs died, its assets have risen by 221%, twice as fast as the company’s sales, reflecting Apple’s huge build-up of profits. Its investments are worth 32% of Apple’s market value, and its profits (investment income, plus gains on derivatives, less interest costs) have been 7% of Apple’s pre-tax profits so far this year. It is also sizeable compared with other financial firms. Consider four measures: assets, debt, credit exposure and profits. Depending on the yardstick, Apple Capital is 30-85% as big as Goldman Sachs. It is 22-42% as large as GE Capital was at its peak in 2007, just before things went down the tubes during the subprime crisis. Apple Capital is different from these firms in important ways. It does not take deposits and has much lower leverage. In their prime Goldman and GE Capital were run by hard-charging financiers, and made lots of loans. By contrast, Apple Capital does not make loans, and is not meant to be a profit centre in its own right. Apple’s core business is so profitable that it is—almost—incredible that a blow-up at Apple Capital could lead to it needing taxpayer or central-bank support, as was the case for GM and GE. Still, it is easy to imagine how Apple Capital could hurt its parent. A market shock could lead to losses on its portfolios. A two-percentage-point rise in interest rates would result in a loss of $10bn. If bond markets dried up, Apple might struggle to issue so much debt and have to bring home funds, incurring a big tax bill. It might also become tricky to run such a big derivatives portfolio. According to a former manager who left in 2012, Apple’s financial gurus were careful because “nobody wanted that 3am call from Steve Jobs”. But Jobs isn’t there any more. In any case, a fear of rebuke is not enough. If the tax laws change Tim Cook, Apple’s boss should wind down the structure that the firm has created. Tech firms should seek to disrupt finance, not be seduced by it.