Apple Inc. said it would make a one-time tax payment of $38 billion on profits accumulated overseas and ramp up its spending in the U.S., as it seeks to emphasize its contributions to the American economy after years of taking criticism for outsourcing manufacturing to China.
The tech giant said Wednesday it plans $30 billion in capital spending in the U.S. over five years that will create more than 20,000 new jobs. It didn't specify how much of that spending was already planned, but said the total will include building a new facility that initially will house customer-service operations, and $10 billion toward data centers across the country. Apple also is expanding from $1 billion to $5 billion a fund it established last year for investing in advanced manufacturing in the U.S.
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Chief Executive Tim Cook touted the plans as building on Apple's support for the U.S. economy. "We have a deep sense of responsibility to give back to our country and the people who help make our success possible," he said in a statement.
Apple said its one-time tax payment was the result of recent changes to U.S. tax law, under which companies must pay a one-time tax of 15.5% on overseas profits held in cash and other liquid assets. Profits held in other forms will be taxed at 8%. The company said in November that it had earmarked $36 billion to cover deferred taxes on its $252.3 billion in overseas cash holdings, assuming that it would eventually pay some tax for bringing that home.
Apple has faced criticism over the past decade for the overseas manufacturing of its iPhone, of which it has sold more than 1 billion units, rather than manufacturing devices domestically. President Donald Trump during the presidential campaign blasted the company for outsourcing. He later called on Apple to build a factory in the U.S. and last year said Mr. Cook promised to build three manufacturing plants in the U.S.
Apple's announcement left many details of its plans unclear, and a spokesman declined to elaborate. The company didn't say how much it planned to return of its $252.3 billion in cash and marketable securities held overseas. It also didn't specify whether it plans to increase dividends or share repurchases, which is something its top executives had said would be a priority following the change in U.S. tax law.
The company previously said it planned $16 billion of capital expenditures world-wide in the current fiscal year ending in September, up from $14.9 billion the previous year. However, Apple doesn't break out its spending in the U.S., making it difficult to gauge how much of the $30 billion over five years is new.
Apple's announcement said it currently employs 84,000 people in the U.S. A year ago, it said it employed 80,000, suggesting its plans for job creation are consistent with what it has been doing. Its annual report, which doesn't break out the number of U.S. employees, said it had a total of 123,000 full-time equivalent employees as of Sept. 30.
The company said it would offer more information later this year on its planned new campus, which will initially house technical support for customers. It already operates multiple campuses across the U.S., such as a facility in Austin, Texas; and its new $5 billion headquarters, Apple Park, in Cupertino, Calif.
Combining the new investments and current spending with U.S. suppliers, Apple estimated it would contribute $350 billion to the U.S. economy over the next five years. The bulk of that spending, estimated at about $55 billion this year, goes to U.S. suppliers, such as glass-maker Corning Inc. The remainder is for capital expenditures, estimated at about $30 billion over five years, and the one-time tax hit of $38 billion. It's unclear if the $4 billion increase in its advanced manufacturing fund is included in its anticipated payments to suppliers or in addition to that spending.
Apple announced its $1 billion advanced manufacturing fund last year. It subsequently committed $200 million to Corning for improvements to a glass manufacturing plant in Harrodsburg, Ky., and committed to $390 million in future purchases from laser manufacturer Finisar Corp., which plans to open a 700,000-square-foot plant in Sherman, Texas.
Apple said it works with more than 9,000 suppliers in the U.S. across 50 states.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
January 17, 2018 17:47 ET (22:47 GMT)
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