Trump will be happy. US job creation move by Apple after it plans to create $1bn fund for US firms
Apple boss Tim Cook has revealed that the iPad maker will establish a $1 billion (£776m) fund to promote advanced manufacturing jobs in the United States.
Cook made the announcement during an interview with CNBC, during which he repeated a point made earlier this year that Apple already spent over $50bn in 2016 with US suppliers such as purchasing adhesives from 3M and glass for the iPhones from Corning.
It comes as Apple and other tech firms faced pressure from President Donald Trump, who has criticised many US tech giants for making their products overseas and not in the United States.
Cook used his interview to also point that Apple directly employees 80,000 people in the United States, either at the company itself or its suppliers and software developers its app ecosystem.
But it was the $1bn fund for advanced manufacturing jobs that took most of the attention.
“We’re announcing it today. So you’re the first person I’m telling,” Cook told Mad Money host Jim Cramer on Wednesday. “Well, not the first person because we’ve talked to a company that we’re going to invest in already,” he said.
Cook added that Apple will announce the first investment later in May, and he said he hoped the fund would be “the first ripple in the pond” for US job creation.
Cook then went to say that Apple would have to borrow the money in order to fund the US scheme.
That comment in particular may raise a few eyebrows, considering Apple has enormous cash reserves.
Indeed, as of the last financial quarter, Apple has $256bn in cash, but 93 percent of that is held overseas.
This is because the United States imposes a huge tax on money earned overseas, if it is brought back into the US.
“If you earn money globally, you don’t bring it back into the United States unless you pay 35 percent plus your state tax,” said Tim Cook. “This is kind of bizarre. To invest in the United States, we have to borrow. This doesn’t make sense on a broad basis. So I think the administration, you saw they’re really getting this and want to bring this (cash) back. And I hope that comes to pass.”
It should be noted that US lawmakers are already considering a tax proposal by President Trump, which would allow firms such as Apple to repatriate accumulated profits from overseas at potentially lower tax rates.
Cook did not however say that Apple would repatriate cash back into the United States if Trump’s tax proposal was enacted.
It should be noted that Apple is not the only tech firm to tackle the issue of job creation in the United States.
In February the CEO of chip giant Intel stood beside Donald Trump in the Oval Office to announce a hefty investment in order to open a factory in Arizona.
Intel’s Brian Krzanich said the factory would create 3,000 long-term jobs in Arizona, and would build chips for data centres and smart devices.
It is worth noting that Intel had previously taken the decision in early 2014 to mothball the factory as a result of the PC slump.