Apple has mastered the art of hyping the ho-hum. The iPhone maker’s semi-regular product presentations carry on a mystique created by late founder Steve Jobs, even when the updates are rather ordinary. Boss Tim Cook is borrowing the approach for his latest $500 billion reveal.
The figure, unveiled on Monday, represents the amount Apple intends to spend in the United States over the next four years. It includes everything from hiring 20,000 workers to building a server factory in Houston to funding blockbuster films for its streaming service. Half a trillion dollars sprinkled around the country is also the sort of commitment that can buy some goodwill with President Donald Trump.
Many such announcements tend to be flimsy or ephemeral. Foxconn’s plan to build a $10 billion plant and create 13,000 jobs in Wisconsin, rolled out in 2017 after Trump first took office, is the archetype of the genre. The Taiwanese manufacturer later dramatically scaled back the project. A promised $500 billion artificial intelligence initiative from OpenAI, SoftBank and Oracle has the potential to go the same way. Apple’s blueprint, is more plausible.
In 2021, it said it would allocate $430 billion to the U.S. over five years and is on track to do so. On that basis, Apple has gone from earmarking about $85 billion a year to about $125 billion, or increase domestic spending about 10% annually. The rate is roughly the same as recent growth for operating costs and investment, with a bit more thrown in to bring some production home.
Although it would be a healthy outlay, it pales compared to some other technology splurges. For example, Microsoft’s capital expenditure alone over roughly the next four years is expected to be some $400 billion, according to Visible Alpha, more than twice as much as during the previous four. Similarly, Apple’s latest hiring pledge is the same as the ones it made in both 2018 and 2021.
Why make such a big deal of what’s mostly business as usual? For one thing, Apple is more vulnerable than peers to intensifying trade wars. About 15% of its nearly $400 billion in revenue in the year to September 28 came from China, which is also a big manufacturing hub for its devices. Higher tariffs probably would mean higher U.S. prices for its gadgets, while any retaliation would threaten sales in China. Although Apple’s financial update is largely incremental, creating a little buzz, in the White House at least, may yet generate some substance.
Apple said on February 24 that it would spend more than $500 billion in the United States over the next four years and hire at least 20,000 people, mostly to work in research, software development and artificial intelligence.
The spending commitment includes payments to suppliers, direct employment, Apple data centers, corporate facilities and Apple TV+ production. It also earmarks $5 billion for its U.S. manufacturing fund, which will double its size.
As part of the package, Apple said it would be working with partners to open a 250,000-square-foot facility to assemble servers in Houston in 2026.
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Source: Reuters
