Pixel Envy

Written by Nick Heer.

Apple Announces a New U.S. Campus and Increased Manufacturing Investment Fund

Apple:

Combining new investments and Apple’s current pace of spending with domestic suppliers and manufacturers — an estimated $55 billion for 2018 — Apple’s direct contribution to the US economy will be more than $350 billion over the next five years, not including Apple’s ongoing tax payments, the tax revenues generated from employees’ wages and the sale of Apple products.

Planned capital expenditures in the US, investments in American manufacturing over five years and a record tax payment upon repatriation of overseas profits will account for approximately $75 billion of Apple’s direct contribution.

As of right now, I am no longer paying my taxes like everyone else. I am contributing to the Canadian economy, and will be issuing a self-congratulatory press release every April.

By the way, Apple estimates that they will pay $38 billion to repatriate $245 billion in income stored internationally, so the actual increase in expenditures and investments in American manufacturing will be $37 billion over five years, or about $7.2 billion per year.

Apple expects to invest over $30 billion in capital expenditures in the US over the next five years and create over 20,000 new jobs through hiring at existing campuses and opening a new one. Apple already employs 84,000 people in all 50 states.

The company plans to establish an Apple campus in a new location, which will initially house technical support for customers. The location of this new facility will be announced later in the year.

This is pretty big news. I’ve seen a handful of reports stating that this will be Apple’s “second” campus. It is not. Apple already has two well-known campuses — Infinite Loop and Apple Park — plus at least one more, in Austin, Texas.

There’s a lot to love about this press release; but, like many of the corporate gestures following last month’s U.S. tax cuts, I don’t see anything here that couldn’t have been done at the previous tax rate if companies like Apple were unable to withhold income internationally. I’m going to get emails for writing that, right?

Update: Tim Bradshaw of the Financial Times breaks down how Apple is calculating their $350 billion economic contribution:

Wednesday’s headline $350bn figure, though, does not include that kind of thing. What it does include is its annual spending with US-based suppliers and manufacturers over five years, capital expenditure plans for its new campus and data centres and a record tax payment related to its repatriation of overseas profits.

Spending with US suppliers was $50bn last year and will be $55bn this year, Apple says. Cynics might argue that this is money Apple would have spent anyway.

Bradshaw on Twitter:

Breaking down Apple’s $350bn “direct contribution” to US:
$275bn+ of spending with US suppliers at $55bn+/year
+$38bn tax bill (estimated) for repatriation of overseas profits
+$30bn capex on new campus, data centres etc
+$5bn adv manuf fund
=$350bn(ish)

A 10% year-over-year increase in supplier spending certainly doesn’t have the impression of that eye-popping $350 billion figure, but it’s nothing to sneeze at either.

I’m interested to see how — if — Apple’s competitors respond.