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.
They've realized that perhaps, just perhaps, they could afford to have more than one large corporate campus at their scale of fuck you money. Which gives them wider access to talent and actually reduces headaches such spiraling cost of living forcing salaries to also spiral upwards and also being expected to solve housing crises locally.
So many of these corporate investment announcements are really "look at what we were already going to do".
Amazon HQ2 anyone?
I dont think infrastructure is the root of our (US) problem. We do have a skills, and talent gap. not just in "tech jobs" like many people think but at factory floor level as well.
Even if they could open the factories tomorrow finding people to fill those jobs will be hard.
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.
I wish Apple or govt would fund similar fab/s in the US - hell just build it with stimi or huge tax breaks and TSMC can still hold the IP and profit, just have enough onshore knowledge to run it in isolation if needed.
CCP hitting TSMC in their first strike would be a hell of a whammy, even if mutually destructive.
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.
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 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.
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.
Barring a major transformation, I don't see Apple ever operating a factory, whether in the US or overseas.
Ita because paying US people for that work is better for the personal development of (otherwise underemployed) US people than paying non-US people.
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?
You can argue yes, if you pay Walmart $50 for eggs and stuff. That means Walmart pays taxes (goes to the Gov), Walmart pays employees (so they can buy other stuff), Walmart buys a product (paying every individual person from shipping to receiving, etc). Opposite would be saying going to Canada and buying it all, and all you would pay would be an import fee. Or buying something from Aliexpress and getting free shipping, which is probably a net value on the US economy.
But you can also argue no, cause it's so small that it is almost insignificant.
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.
They are a US company, reaping the tax benefits of that nexus. If they'd been an EU company, they would have paid a lot more in various taxes (including higher wage taxes) over the last 40 years. IOW, they would not be as wealthy a company today.
i've read some rhetoric somewhere that deflationary money is a terrible thing for the economy since it reflects in asset prices and makes you more concerned with saving. From my perspective, that's a very good economic consequence and would stop all these boom bust cycles that we seems to be creeping up at irregular intervals of massive spending.
A better system of stock trading would be bonding. When i buy a stock, the money is locked into a contract that is reimbursed to me after the purchase period. say i buy $100 worth of Tesla for a 1 year stock period. At the end of that lease, i will recieve my $100 back and Tesla may reward me with a % based on the performance of that year. I have no liquidity but my only 'Loss' is the loss of other rewards i could have gained by betting in another industry or company. Everything being completely liquid allows for HFT and the banking industry to drain our economic fecundity by placing it in the realm of fairy-land instead of investments in infrastructure, energy generation and manufacturing.
Money is not wealth. Money is a tool. The goal, at a macro level, is not to have people having big piles of money. Because money, in and of itself, is not that important. What matters is how the money is used. And the more it's used, the better. Money being used is consumption and investment.
What you call "a better system of stock trading" is called a "bond". It's debt and works similarly to how you described except the reward % is typically fixed.
Deflationary thinking meant everyone expects prices to be lower tomorrow, so no one spent money on needed items and simply waited to make purchases to save money. This slowed down the economy into a death spiral that they still are climbing out of. Mortgages became crushing. You can't get a raise. Interest and deflation work together to make debt nearly inescapable.
The point of money is to be spent, i.e. facilitate the simple transfer of value. An excellent example of the direct damaging effects of deflation is bitcoin. No one spends it. It has utterly failed at its goal to become a primary mechanism to transfer value. Everyone expects its value to keep increasing so it is almost never transferred (to the point that hodling and never spending became a meme). Slowing down the exchange of money is what kills an economy.
It is very simple why this is not a good policy.
Let's say you are a software engineer working on some software product/service. You are working hard on that software, adding features, fixing issues, maintaining it, etc. The buyer pays you $100 today for that software.
Tomorrow you release a new version, with lots of upgrades and new capabilities. The buyer for this software says "my money should be worth more tomorrow than it is today" so they offer only $80 for the new version. Boom -- your work is worth less every day!
Just for illustration, imagine if you know that you can buy 2 rolls of toilet papers 2 months later for the price of 1 toilet paper today, and you don't have an immediate need for toilet paper, then most likely you'd wait.
Spendings is what drives the economy and it's the circulation and liquidity that help the economy becomes more productive.
Precisely because it did happen a long time ago. None of what is pointed out is new. It is basically celebrating Apple is an US business.
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.
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.
Sure you can make the arguments against vertical integration, but to "doubt they have the scale" when speaking of the most valuable company in the world, with a product in the hands of billions? If Apple doesn't have the scale, then who does?
However you are correct in that TSMC still owns and operates its older node fabs. Today's cutting edge fab is tomorrow's legacy fab producing no-longer cutting edge commodity parts. This is why Apple won't buy any fabs or fab operators themselves.
https://www.theverge.com/2021/3/23/22347250/intel-new-factor...
Might be.
They can announce this now and change their mind as they please, right? I'm not sure about Apple's track record on things like this, they may be good, but they could just slowly pull or decrease funding, and we probably won't even hear about it in the future, or am I missing something?
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.
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
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.
But since then, Austin, Denver, NC, Nova, Portland, Nashville and others have all done a really good job of actually competing with California for tech industry growth. On paper, Florida seems like it should be really competitive in this space. Good weather, low taxes, business friendly climate, immigrant centric culture, decently low cost of living, good schools, and population ties to the high-skilled NYC area.
So, I'm genuinely curious, because I know there are people on this board who are in a position to make these decisions. If your company considered a satellite campus in Miami or Tampa or the Space Coast and decided to pass, what was the reason? The sticky summers? Lack of topography? Florida Man stereotypes?
> Austin, Denver, NC, Nova, Portland, Nashville
All have great universities in the immediate vicinity which are a nexus for commercial intellect. These metros are roughly 1/3 of the size with probably double on avg. the available tech talent pool.
So it takes $22 million investment to add just 1 job?
Something seems off.
i.e. Say I invest $10M to make a precision machine shop and I employing 5 machinists, as a crude example. Here my goal was to make a machine shop capable of producing precision parts, not to spend $2M/job.
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.
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.
that's not what op (the person you're responding to) is saying at all. they're simply saying that apple disguises its infrastructure spending as charity and that that's off-putting. in fact it's not charity and furthers their own goals.
it'd be like me claiming to be a philanthropist because i had to a build a road connecting my factory to my mine that incidentally connects towns along the way. note this is example is right on the nose because this is exactly what corporations do.
GP never implied that it was "useless" at all. Your question (to use some more Latin) is a total non-sequitur.
>there would be a twin top comment lamenting Apple's lack of domestic spending.
Yes, different people have different opinions.
If they did their massive campus in Eastern Europe they would get a lot of cheap smart talent, cheap building and probably a favourable tax treatment (if they needed even more of that).
Replace with Canary Islands, Cyprus or Malta if you want somewhere with nice weather.
This is part PR, part gaining political favours.
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.
Companies are more than welcome to make themselves at home iff they pay their dues, and should not be welcome if they don't.
That's the point. It isn't. The OP was asking why it's therefore being sold as one.
Phrases....
This tax-break-if-you-locate-here thing is a longstanding scam against politicians by companies.
https://www.nbcnews.com/business/business-news/corporate-tax...
These tax incentives should be structured as follows:
1. Do your payroll and pay your payroll taxes (FICA, Federal and State unemployment, whatever).
2. Submit your payroll tax receipts to the state incentive operation.
3. Get a rebate of some percentage of that payroll tax.
In other words, no tax-break payments until people get actually paid.
This incentivizes the company to do what the state wants: employ people in good jobs. If the company gets a "better offer" from some other place and moves, then the state doesn't get completely screwed over.
> 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.
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”
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.
Any community with half a functioning government should give tax breaks to get these kinds of jobs from such a reputable company.
Increased homelessness from rapid gentrification
Tax breaks stimulate innovation and investments.
Jobs was talking about cheap manufacturing jobs in China.
They definitely look nicer than most public cities.
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.
Companies have tried their hands at being the government in the past, and the outcome has always been.... something less than utopian.
One concern I have is regarding IP and open source works. I recall an article posted to HN a while back where someone who had got a job apple was required to give up a project they had worked in outside work.
That's just a scaled-up version of pink-washing - Look, apple is so great, we can't dismantle it for being a monopoly! Now run and do something bad to the real villains like Amazon!
They can start by honestly and fully paying their taxes.
It's called an office park
$57bn of that was income [1], so about 40% of spend. Which lines up with the 41% of revenues Apple gets from the U.S. [2].
[1] https://www.apple.com/newsroom/pdfs/FY20_Q4_Consolidated_Fin...
[2] https://www.apple.com/newsroom/2020/10/apple-reports-fourth-...
The big market distortion is coming. Get prepared for absolute insanity.
It is not that far-fetched to think that in a not so distant future China consider the USA (and Europe) as sources of cheap manufacturing.
"0 CNY" -- Do you not consider expansion of credit by state-owned commercial banks equivalent to "printing money"? I do. It causes inflation through rising housing costs. (All major central banks now include housing costs in their inflation figures.)
The more likely scenario of the future of "cheap manufacturing" is (near) total automation in highly developed countries with (near) zero-cost green energy. That means their carbon intensity will be very low. Thus, carbon (import/export) taxes will be very low. Why sew socks in a country with very low labour costs, but coal-generated electricity? A machine/robot can sew the same socks using green energy in a factory located 100km outside a major city in a highly developed country. As an example: Look at Fast Retailing (Uniqlo, etc.), headquartered in Japan, but truly global as a retail brand. They are a world leader in highly automated manuf. of clothes. (Same for Zara.) I can imagine they will be one of the first to aggressively "on-shore" from developing countries to Japan, where clothes will be (near) 100% robot-made. I have heard much the same about Adidas and re-shoring shoe manuf. to Germany with (near) 100% automation.
We see rapid asset inflation across the board. Check recent commodity prices across copper, lumber, food, water etc. Everything has been rising dramatically during the period that the world has been practicing what you call 'Quantitative easing'. Inflation isn't just related to Forex if all the worlds currency's are inflating, albet just maybe faster than the USD. And the only reason the US is not inflating faster than the rest of the world is because the IMF is based in USD.
* Inflation.
* Re-evaluation of the exchange rates
* Supply issues if the above two do not happen
Time will tell :-) But the main reason it hasn't happened yet is because the money that has been printed (or whatever) has not made its way to the real economy yet, it has mostly gone to the financial markets. When people will try to use that money for real, that's when sh* will hit the fan
Also, many of us enjoy and still want direct in-person collaboration. If you don't and your job doesn't require it, then good for you. Enjoy, but there is no need to project that onto everyone else.
https://americansfortaxfairness.org/issues/corporate-taxes/h...
