Let’s run through the possible reasons Apple announced this, with various degrees of cynicism.
1. Getting some good press before Congress decides to do something in regards to the app store model.
2. Apple is reading the winds, seeing that Chinese supply chains may be politically constrained, and preparing for that future.
3. Apple is reading the winds, seeing that Chinese supply chains may be politically constrained, and announcing this investment so they can continue to have Chinese supply chains after a good PR move.
Apple and much US associated supply chains have already been moving away from China. Media is regularly coming up where the side effects are reported, for example the Foxconn contractor in India. The US lacks the infrastructure to leverage talent or capacity domestically. The only thing that will fix this is government policy--otherwise Silicon Valley would have decent transit, no homelessness and California would have its own State or region-level healthcare delivery network. The same things Taiwan has with only 23 million people that benefits TSMC (and the people there).
If I was Apple getting out of the Chinese supply chain would be a priority - if only to have some leverage with a second option.
It seems like a pretty high risk situation for them and has chilling effects elsewhere (content restrictions on Apple TV). It also damages their brand ethos around privacy. CCP pressure on Taiwan and TSMC is also a concern I'd be thinking about if I was them.
Yes, well we as a developer community can never let up on Apple and Google's app store models being legally reprehensible.
We are quite literally the most negatively affected community by these monopolies over general consumer's devices.
We need to be the "force to be reckoned with" here and constantly petitioning politicians for action else get campaigned AGAINST electronically (our domain).
I would say that the app store model negatively affects a growing "small software business" sector of the economy which will only continue to grow as a stable pillar of the modern middle class.
In other words, this is only becoming that much more of a critically important issue.
Most of the so-called "investment" is real estate based. They will most probably develop some very expensive offices, fancy stores, put some additional people to work there, and call it a day.
>Apple’s $430 billion in contributions to the US economy include direct spend with American suppliers, data center investments, capital expenditures in the US, and other domestic spend — including dozens of Apple TV+ productions across 20 states, creating thousands of jobs and supporting the creative industry.
I dont like how Apple spin this as investment in the headline, when it is clearly contribution. If you buy something at Walmart, or any of your daily needs, is that an investment in US?
And I dont know how that $430B is calculated.
Direct Spend with American Suppliers are mostly Corning for Front Glasses, Qualcomm for Modem and Patents. These two alone is close to $50B in five years.
Even if Apple spend $10B on Datacenter and $10B on Apple TV ( They dont ), Likely including all their employees salary, Rent for Apple Retail, basically every single dollar spend within US. The numbers still doesn't add up.
It reads to me Apple is doing their PR pieces on their contribution to US because Congress is now looking at them as enemies.
> If you buy something at Walmart, or any of your daily needs, is that an investment in US?
If a company opens an office overseas and hires people, we call it foreign direct investment. Using the same math for domestic investment seems alright. It's money being pumped into the local economy, after all.
It reads like they're trying to avoid creating jobs in manufacturing directly, but will instead pick US suppliers and potentially let them hire lower skilled workers.
I wouldn't expect this to create that many jobs in manufacturing, it seems more like engineering and creative work, with a promise to prefer US suppliers, assuming they exists.
That's a standard use of the term "investment" in the macroeconomic sense of exchanging money to get people to do work so they can pay other people to do work for them.
Ita because paying US people for that work is better for the personal development of (otherwise underemployed) US people than paying non-US people.
Well, it’s all spending, but is all spending investment?
From an accounting perspective, when a business spends money on a factory it’s an investment since you end up with an asset on the balance sheets. But the same is true of spending on inventory. There are also intangible investments that don’t end up on balance sheets (like writing software) and for high tech companies that can be pretty substantial.
You could simplify this to “Apple says they’re going to spend a lot of money in the US.” Okay, I guess that’s good?
I don't care why they are doing this, but it should have happened a long time ago. The cynism here is disappointing.
If companies start investing their money domestically then excess savings will fall, deflationary pressures will be gone and the economy will start growing quickly again and that means wages will grow too.
I'm probably reading too much into this, but it feels like this and other corporate announcements are channeling a pretty substantial shift in political-economic mood, theory-space or whatnot. They seem to be justifying themselves in ways that were previously unnecessary.
If Monetarism really is being abandoned, I predict unpredictable changes to economic thinking across the board. It was definitely impactful on the way in. I suppose unicorns zooming past the $trn mark is connected too.
The "cash accumulation" aspect of FAANG economies is (IMO) hard to digest in terms of economic theory. Rather that existing to finance economic activity, these companies make stock markets look like they exist solely for liquidity: cashing out VCs, compensating executives, etc. There is no "I need $1bn to build a new factory or something." There is no equity/debt ratio. Most of the texbook (at least mine, from circa 2003) doesn't apply. Apple/etc have plenty of cash, and don't need capital to expand either way. Economics has surprisingly little (new) to say about why dividends aren't happening, the difference between buybacks & dividends or cash accumulation generally.
I can think ways to "story" cash accumulation. Eg, instead of investors getting dividends and buying Vanguard or Bitcoin, FAANGs might as well just buy the securities on their behalf. This could be an argument, but I haven't heard it made. I'm not advocating it, just eg.
A "hostile" story might be that Apple are hogging all the capital that should be available for Tesla or some other company that actually needs capital.
In any case, I suspect there is more pressure to invest big sums than we know.
Reading between the lines, anyone else seeing an inhouse FAB! In the name of vertical integration, that is the last thing they need to consolidate after M1. Imagine Processor, Graphics, Modem, Baseband, Power Control all chips designed inhouse and manufactured on own FAB. ;)
I doubt they have the scale to make owning a fab worthwhile.
Certainly, unless they branch out into selling more mundane chips, they would have a problem using the capacity in their fabs for their own chips once those fabs get older.
Correct me if I'm wrong, but I take it the funding going into all of these office spaces means remote working at Apple is more or less impossible in the future for the vast majority of employees?
I don’t really see anything significant here about derisking their heavy dependence on Chinese assembly and supply chains which means they will continue to be over a barrel and subject to the whims of the CCP as well as US - China relations.
Plus the spreading of their small manufacturing fund over several states isn’t going to bring about an American Shenzhen, like with Silicon Valley, it needs to be a geographically centralized hub or nexus to get increasing gains from cross pollination between all of the firms.
Apple needs to be investing to lessen their dependence on Foxconn mainland manufacturing and logistics.
> Apple is the largest taxpayer in the US and has paid almost $45 billion in domestic corporate income taxes over the past five years alone.
They just had to slip this in there. If they were taxed appropriately on the money over seas we would see an additional $10billion. Being the least scummy in a field rife with tax evasion isn't saying much.
Also...
> Apple’s contributions in the US have significantly outpaced the company’s original five-year goal of $350 billion set in 2018
So it's only upping the amount it had already pledged. So they were already doing it anyway
Tax evasion is allowed by the people you elect, and you know it. Any unelected corporation can only be bound by the laws and system that it is a part of.
If you really want to change things then start speaking out against any and all politicians in bed with private actors (for ANY political party, btw) -- not overly-focusing on just "those politicians who disagree with you on abortion" or something else insanely and profoundly silly.
Also, if you really, and I mean truly, despise the way things are then stop complaining on the internet and run for local office? Then if that goes well, run for a higher office? Just an idea. But an idea that the vast majority of us on HN never take seriously.
If this is true, I'm bullish on real estate in Elk Grove, California. Elk Grove is a suburb of Sacramento that is about 1.5 hours from San Francisco. Apple used to have a major manufacturing presence here before they expanded their manufacturing in China. After Apple moved their manufacturing overseas, Elk Grove became a sleepy suburb where engineers from the Bay Area moved their families to get affordable homes and better schools.
Ever since telecommuting for work took off, the house prices have been spiking.
Disclosure: I have been looking at Elk Grove, Folsom, and other Sacramento suburbs as a possible place to relocate my family and team ... my team and I are not happy with the cost of living in SF, and we can get a lot more bang for buck by moving away.
You can get a 4 bedroom, 2500 sqft house in Elk Grove for about 750,000 now (six months ago it was 500,000). The schools are also quite diverse ... over 30% Asian and Indian.
I kind of hate the way Apple phrases their business investments like they're performing some great charitable act. Also, I'll wait for an external audit of whether they're paying all the relevant local taxes before I would consider giving them credit for these "investments" in local infrastructure they're making.
> hate the way Apple phrases their business investments like they're performing some great charitable act
Why do you think domestic investment is so economically useless that it must be a charitable act?
Cupertino is announcing spend. Spending here is better for people here, ceteris paribus, than spending there. If they announced $430bn in new Southeast Asian contracts, there would be a twin top comment lamenting Apple's lack of domestic spending.
Why investments should be like charitable act? Investments are suppose to be win-win, because they are investments, not handing out money ...
Also, it is a very low level misconception that paying local taxes is how you contributing to the local community. No. Investing is already contributing to the local community. The business will build campus there, and hire people there, and also increase other local businesses surround the campus. And those people work for them pay income taxes there and also pay consumer taxes there. Every local government understand these, that's why they want to attract investments and give their tax breaks, because investments alone bring benefits to the local community.
It would be extremely stupid for any local government to say: Hey we don't you invest hundred millions in our community, unless you pay full taxes. Lol.
Please indicate the phrases that imply a "great charitable act." I see normal, straight-forward corporate press release speak. If Intel or Google were making a similar announcement it would sound quite like this one. They are making significant investment. Would you "give them credit" if they were not making the investments?
Well that's the way everyone is doing. When individuals eating some good food nearby call it "supporting local African-american business". Why wouldn't Apple or any other company make a virtue out of necessity.
> I'll wait for an external audit of whether they're paying all the relevant ..
They will be paying minimum legal taxes possible not maximum possible. If this is something one need to feel outraged they can start early and not wait for reports/audits.
I’m curious if you could quote what exactly in this news is written as if it’s a charitable investment on part of Apple.
If this announcement was in India or China, folks would be grabbing pitchforks that Apple is sending jobs overseas. So they’re bring net new tech jobs here, and your response feels like “damned if you do, damned if you don’t”
Well that's the reality of our economy in 2021. A tech behemoth coming to your town and adding jobs + the human capital + tax base that comes with it can be transformative, and there's few other options for localized economic growth sadly.
I don't know, with so much of American business capital seemingly having gone to Asia in the past several decades, it is rather charitable to be investing in the U.S.
I mean, I wish it were not, I wish it were normal for U.S. business to invest in the U.S., but here we are.
How many people did Apple have to hire to make the new Apple campus? You can directly see the impact that had. Compare that to Amazon or Foxconn. At least they actually seem to hold a large majority of their promise.
Taxes will be payed purely by virtue of hiring the 20,000 employees they want, which will stimulate the economy. Let's not dumb down the conversation by claiming that companies lowering their tax expenditure is somehow bad.
This is fantastic. Apples devices continue to be so groundbreaking (M1), it’s exciting that their culture of innovation and excellence will be spread more throughout the country. They will further seed the innovation hubs in all these places. I think it’s smart too, to gain new perspectives and tap new talent that doesn’t want to move to San Jose area.
I've been postulating privately that we will move towards opt-in private governments, with private cities, that people get citizen scores and have no privacy, and that we will _choose_ to do that, because it will be a utopia inside those walls.
Your suggestion here solidifies that in my mind. We will live on private campuses owned by the corporation for which we work. It will be a utopia in there. And we will have no privacy. And we will be rated. And we will love being quantified. And outside those walls the world will decay.
[+] [-] perardi|5 years ago|reply
1. Getting some good press before Congress decides to do something in regards to the app store model.
2. Apple is reading the winds, seeing that Chinese supply chains may be politically constrained, and preparing for that future.
3. Apple is reading the winds, seeing that Chinese supply chains may be politically constrained, and announcing this investment so they can continue to have Chinese supply chains after a good PR move.
[+] [-] jacobr1|5 years ago|reply
[+] [-] Daishiman|5 years ago|reply
[+] [-] jimmont|5 years ago|reply
[+] [-] gonehome|5 years ago|reply
It seems like a pretty high risk situation for them and has chilling effects elsewhere (content restrictions on Apple TV). It also damages their brand ethos around privacy. CCP pressure on Taiwan and TSMC is also a concern I'd be thinking about if I was them.
[+] [-] StandardFuture|5 years ago|reply
Yes, well we as a developer community can never let up on Apple and Google's app store models being legally reprehensible.
We are quite literally the most negatively affected community by these monopolies over general consumer's devices.
We need to be the "force to be reckoned with" here and constantly petitioning politicians for action else get campaigned AGAINST electronically (our domain).
I would say that the app store model negatively affects a growing "small software business" sector of the economy which will only continue to grow as a stable pillar of the modern middle class.
In other words, this is only becoming that much more of a critically important issue.
[+] [-] coliveira|5 years ago|reply
[+] [-] ksdale|5 years ago|reply
[+] [-] plank_time|5 years ago|reply
[+] [-] ksec|5 years ago|reply
I dont like how Apple spin this as investment in the headline, when it is clearly contribution. If you buy something at Walmart, or any of your daily needs, is that an investment in US?
And I dont know how that $430B is calculated.
Direct Spend with American Suppliers are mostly Corning for Front Glasses, Qualcomm for Modem and Patents. These two alone is close to $50B in five years.
Even if Apple spend $10B on Datacenter and $10B on Apple TV ( They dont ), Likely including all their employees salary, Rent for Apple Retail, basically every single dollar spend within US. The numbers still doesn't add up.
It reads to me Apple is doing their PR pieces on their contribution to US because Congress is now looking at them as enemies.
[+] [-] JumpCrisscross|5 years ago|reply
If a company opens an office overseas and hires people, we call it foreign direct investment. Using the same math for domestic investment seems alright. It's money being pumped into the local economy, after all.
[+] [-] mrweasel|5 years ago|reply
I wouldn't expect this to create that many jobs in manufacturing, it seems more like engineering and creative work, with a promise to prefer US suppliers, assuming they exists.
[+] [-] gowld|5 years ago|reply
Ita because paying US people for that work is better for the personal development of (otherwise underemployed) US people than paying non-US people.
[+] [-] skybrian|5 years ago|reply
From an accounting perspective, when a business spends money on a factory it’s an investment since you end up with an asset on the balance sheets. But the same is true of spending on inventory. There are also intangible investments that don’t end up on balance sheets (like writing software) and for high tech companies that can be pretty substantial.
You could simplify this to “Apple says they’re going to spend a lot of money in the US.” Okay, I guess that’s good?
[+] [-] imtringued|5 years ago|reply
If companies start investing their money domestically then excess savings will fall, deflationary pressures will be gone and the economy will start growing quickly again and that means wages will grow too.
[+] [-] dalbasal|5 years ago|reply
If Monetarism really is being abandoned, I predict unpredictable changes to economic thinking across the board. It was definitely impactful on the way in. I suppose unicorns zooming past the $trn mark is connected too.
The "cash accumulation" aspect of FAANG economies is (IMO) hard to digest in terms of economic theory. Rather that existing to finance economic activity, these companies make stock markets look like they exist solely for liquidity: cashing out VCs, compensating executives, etc. There is no "I need $1bn to build a new factory or something." There is no equity/debt ratio. Most of the texbook (at least mine, from circa 2003) doesn't apply. Apple/etc have plenty of cash, and don't need capital to expand either way. Economics has surprisingly little (new) to say about why dividends aren't happening, the difference between buybacks & dividends or cash accumulation generally.
I can think ways to "story" cash accumulation. Eg, instead of investors getting dividends and buying Vanguard or Bitcoin, FAANGs might as well just buy the securities on their behalf. This could be an argument, but I haven't heard it made. I'm not advocating it, just eg.
A "hostile" story might be that Apple are hogging all the capital that should be available for Tesla or some other company that actually needs capital.
In any case, I suspect there is more pressure to invest big sums than we know.
[+] [-] ramshanker|5 years ago|reply
[+] [-] tonyedgecombe|5 years ago|reply
[+] [-] Someone|5 years ago|reply
Certainly, unless they branch out into selling more mundane chips, they would have a problem using the capacity in their fabs for their own chips once those fabs get older.
[+] [-] hit8run|5 years ago|reply
[+] [-] tolbish|5 years ago|reply
[+] [-] arthur_sav|5 years ago|reply
[+] [-] Covzire|5 years ago|reply
[+] [-] brigandish|5 years ago|reply
Might be.
[+] [-] tapoxi|5 years ago|reply
[+] [-] cromwellian|5 years ago|reply
Plus the spreading of their small manufacturing fund over several states isn’t going to bring about an American Shenzhen, like with Silicon Valley, it needs to be a geographically centralized hub or nexus to get increasing gains from cross pollination between all of the firms.
Apple needs to be investing to lessen their dependence on Foxconn mainland manufacturing and logistics.
[+] [-] Decabytes|5 years ago|reply
They just had to slip this in there. If they were taxed appropriately on the money over seas we would see an additional $10billion. Being the least scummy in a field rife with tax evasion isn't saying much.
Also...
> Apple’s contributions in the US have significantly outpaced the company’s original five-year goal of $350 billion set in 2018
So it's only upping the amount it had already pledged. So they were already doing it anyway
[+] [-] StandardFuture|5 years ago|reply
If you really want to change things then start speaking out against any and all politicians in bed with private actors (for ANY political party, btw) -- not overly-focusing on just "those politicians who disagree with you on abortion" or something else insanely and profoundly silly.
Also, if you really, and I mean truly, despise the way things are then stop complaining on the internet and run for local office? Then if that goes well, run for a higher office? Just an idea. But an idea that the vast majority of us on HN never take seriously.
[+] [-] dmode|5 years ago|reply
[+] [-] continuations|5 years ago|reply
So it takes $22 million investment to add just 1 job?
Something seems off.
[+] [-] TheMagicHorsey|5 years ago|reply
Ever since telecommuting for work took off, the house prices have been spiking.
Disclosure: I have been looking at Elk Grove, Folsom, and other Sacramento suburbs as a possible place to relocate my family and team ... my team and I are not happy with the cost of living in SF, and we can get a lot more bang for buck by moving away.
You can get a 4 bedroom, 2500 sqft house in Elk Grove for about 750,000 now (six months ago it was 500,000). The schools are also quite diverse ... over 30% Asian and Indian.
[+] [-] Traster|5 years ago|reply
[+] [-] JumpCrisscross|5 years ago|reply
Why do you think domestic investment is so economically useless that it must be a charitable act?
Cupertino is announcing spend. Spending here is better for people here, ceteris paribus, than spending there. If they announced $430bn in new Southeast Asian contracts, there would be a twin top comment lamenting Apple's lack of domestic spending.
[+] [-] temp8964|5 years ago|reply
Also, it is a very low level misconception that paying local taxes is how you contributing to the local community. No. Investing is already contributing to the local community. The business will build campus there, and hire people there, and also increase other local businesses surround the campus. And those people work for them pay income taxes there and also pay consumer taxes there. Every local government understand these, that's why they want to attract investments and give their tax breaks, because investments alone bring benefits to the local community.
It would be extremely stupid for any local government to say: Hey we don't you invest hundred millions in our community, unless you pay full taxes. Lol.
[+] [-] tamcap|5 years ago|reply
[+] [-] dev_tty01|5 years ago|reply
[+] [-] geodel|5 years ago|reply
> I'll wait for an external audit of whether they're paying all the relevant ..
They will be paying minimum legal taxes possible not maximum possible. If this is something one need to feel outraged they can start early and not wait for reports/audits.
[+] [-] tracer4201|5 years ago|reply
If this announcement was in India or China, folks would be grabbing pitchforks that Apple is sending jobs overseas. So they’re bring net new tech jobs here, and your response feels like “damned if you do, damned if you don’t”
[+] [-] fullshark|5 years ago|reply
[+] [-] JKCalhoun|5 years ago|reply
I mean, I wish it were not, I wish it were normal for U.S. business to invest in the U.S., but here we are.
[+] [-] zitterbewegung|5 years ago|reply
[+] [-] alexfromapex|5 years ago|reply
[+] [-] gogopuppygogo|5 years ago|reply
Any community with half a functioning government should give tax breaks to get these kinds of jobs from such a reputable company.
[+] [-] gher-shyu3i|5 years ago|reply
Tax breaks stimulate innovation and investments.
[+] [-] breck|5 years ago|reply
[+] [-] 55555|5 years ago|reply
[+] [-] Aissen|5 years ago|reply
[+] [-] jokethrowaway|5 years ago|reply
Jobs was talking about cheap manufacturing jobs in China.
[+] [-] jokethrowaway|5 years ago|reply
They definitely look nicer than most public cities.
[+] [-] nightowl_games|5 years ago|reply
Your suggestion here solidifies that in my mind. We will live on private campuses owned by the corporation for which we work. It will be a utopia in there. And we will have no privacy. And we will be rated. And we will love being quantified. And outside those walls the world will decay.