Apple Plans $1 Billion Advanced Manufacturing Fund -- Update

By Tripp Mickle Features Dow Jones Newswires

Apple Inc. plans to create a $1 billion fund to invest in U.S. companies that do advanced manufacturing, Chief Executive Tim Cook said on Wednesday.

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Mr. Cook, during an appearance on CNBC, said the new fund will support U.S. manufacturing and its first investment will be announced later this month. He didn't provide any details on the fund's targets.

Apple Inc. plans to create a $1 billion fund to invest in U.S. companies that do advanced manufacturing, Chief Executive Tim Cook said on Wednesday.

Mr. Cook, during an appearance on CNBC, said the new fund will support U.S. manufacturing and its first investment will be announced in May. He didn't provide any details on the fund's targets.

Apple faced criticism during the presidential campaign from then-candidate Donald Trump for outsourcing the production of its iPhones and other devices to factories in China. Right after he won the election, Mr. Trump said in Time magazine that he told Mr. Cook that he wants "to get Apple to build a great plant, your biggest and your best."

Apple in the past has said it supports about 2 million jobs in the U.S., including its own employees and those of suppliers, app developers and entrepreneurs who offer products across its devices. The company directly employs 80,000 people in the U.S.

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A number of U.S. manufacturers including 3M Co. and Corning Inc. make products in the U.S. that Apple uses in its devices, and two of its contract manufacturers have small production lines to make certain Mac computer products in Texas and California. But the overwhelming majority of Apple products, including the iPhone, are assembled in China.

"We're looking at this thing deeply," Mr. Cook said Wednesday during an appearance on CNBC where he announced the new fund. "How do we grow our employee base? How do we grow our investor base? How do we employ (in) manufacturing?"

Mr. Cook also suggested Apple will announce plans to provide financial support to app developers this summer. He said the company is asking how it can create more developers who can build more apps.

Apps have become an integral piece of Apple's swelling services business, generating $28.5 billion in total revenue last year, with Apple collecting about $8.5 billion based on its 30% share of such sales.

Apple holds enormous capital reserves -- its stock of cash and cash equivalents topped $256.8 billion at the start of April, against just $98.5 billion in debt. The company has been cautious about investing that money beyond Treasury and other securities, and its largest acquisition to date was the $3 billion purchase of Beats Electronics LLC in 2014.

Recently, though, it has announced several sizable investments. Last year, it invested $1 billion in Didi Chuxing Technology Co., China's homegrown ride-sharing competitor to Uber Technologies Inc. Then, this year, it announced it would invest $1 billion in SoftBank Group Corp.'s $100 billion technology fund.

Mr. Cook said Apple will finance the $1 billion manufacturing fund by borrowing against its overseas holdings of $239.6 billion.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

May 03, 2017 20:31 ET (00:31 GMT)