AI: Apple's new US AI Infrastructure deal. RTZ #642

Apple has long been globally practical in its tech and AI commitments, constantly ‘threading the needle’ in its own ‘Realpolitik’ way through the long building US/China geopolitical tech/AI trade tensions and curbs.

Now CEO Tim Cook has made his own $500 billion plus US AI tech infrastructure commitments, echoing similar moves by OpenAI/Softbank’s similarly sized AI data center infrastructure ‘Stargate’ deal, to negotiate through the new Trump administration imperatives, in its drive to increase US tech investments or face higher tariffs.

Axios lay is out in “Trump manufacturing win: Apple to spend $500 billion in U.S., hire 20,000”:

“Apple on Monday morning announced plans to invest more than $500 billion in the U.S. and hire 20,000 people over the next four years, with expansion and construction planned from coast to coast.”

• “The new jobs will focus on research and development, silicon engineering, software development, and AI and machine learning.”

• “Apple plans to greatly expand chip and server manufacturing in the U.S., plus skills development for students and workers across the country.”

The move is optimally designed for the transactionally political moves of these times:

“Why it matters: Apple’s announcement — which the company calls its “largest-ever spend commitment” — is precisely the kind of win President Trump has been looking for with his push to move manufacturing back to the U.S.”

• “Apple’s new investment — much of it in red states — lets Trump say to other companies: Apple can do it. Why can’t (or won’t) you?”

“Apple CEO Tim Cook said in the announcement: “We are bullish on the future of American innovation, and we’re proud to build on our longstanding U.S. investments with this $500 billion commitment to our country’s future.”

• “From doubling our Advanced Manufacturing Fund [from $5 billion to $10 billion], to building advanced technology in Texas, we’re thrilled to expand our support for American manufacturing,” Cook added. “And we’ll keep working with people and companies across this country to help write an extraordinary new chapter in the history of American innovation.”

Like the other moves by US tech company founders and CEOs, this too has been in the works since the inauguration, with the final details being revealed in a last minute crescendo of activity:

“The backstory: Trump met with Cook on Thursday in the Oval Office. Then Trump got so excited that he revealed the plans prematurely, saying on-camera while meeting with governors that Cook is “investing hundreds of billions of dollars. I hope he’s announced it — I hope I didn’t announce it, but what the hell? All I do is tell the truth — that’s what he told me. Now he has to do it, right?”

• “He is investing hundreds of billions of dollars and others, too,” Trump continued. “We will have a lot of chipmakers coming in, a lot of automakers coming in. They stopped two plants in Mexico that were … starting construction. They just stopped them — they’re going to build them here instead, because they don’t want to pay the tariffs. Tariffs are amazing.”

And Apple is adroitly providing its overall historical hiring context on US shores:

“The big picture: Apple says it now supports nearly 3 million jobs across the U.S. through direct employment, work with suppliers and manufacturers, and developer jobs in the iOS app economy.”

• “Apple already works with thousands of suppliers across all 50 states, including 24 factories in 12 states.”

• “Apple’s U.S. Advanced Manufacturing Fund has supported projects in 13 states, helping build local businesses and train workers.”

The move continues on siimilar initiatives by the company previously:

“Reality check: Apple made a similar announcement four years ago. In 2021, Apple committed $430 billion in U.S. investments and 20,000 new jobs across the country over five years — including a new campus in Research Triangle Park, North Carolina, where development was paused last year.”

This particular announcement in Texas has to do with expanding Apple’s plans for Apple Intelligence’s ‘Private Cloud Compute infrastructure, using Apple’s own Apple silicon server chips, a topic I’ve discussed earlier. These investments are spread liberally across several states, both red, blue and between:

• “Texas: New advanced AI server manufacturing factory near Houston. The 250,000-square-foot server manufacturing facility, slated to open in 2026, “will create thousands of jobs,” Apple’s announcement says. “Previously manufactured outside the U.S., the servers that will soon be assembled in Houston play a key role in powering Apple Intelligence, and are the foundation of Private Cloud Compute, which combines powerful AI processing with the most advanced security architecture ever deployed at scale for AI cloud computing. The servers bring together years of R&D by Apple engineers.”

• “Michigan: New Apple Manufacturing Academy in Detroit. “Apple engineers, along with experts from top universities such as Michigan State, will consult with small- and medium-sized businesses on implementing AI and smart manufacturing techniques,” the announcement says. “The academy will also offer free in-person and online courses, with a skills development curriculum that teaches workers vital skills like project management and manufacturing process optimization.”

  

• “California: Construction of a state-of-the-art campus is underway in Culver City, an entertainment enclave in L.A. County. In San Diego, a 4,000-member team will continue to grow.”

• “Arizona: Apple-designed Apple Silicon will be produced at TSMC’s Fab 21 semiconductor plant in Phoenix.”

• “Washington state: Apple has doubled the number of team members in Seattle over the past three years to 2,400+, and will keep growing.”

• “Operations will expand in Mesa, Arizona … Reno, Nevada … Prineville, Oregon … and Maiden, North Carolina (outside Charlotte).”

As Bloomberg pithily summarizes it:

“During Trump’s first administration, Cook was able to successfully sway him into sparing the iPhone from tariffs by arguing that the tax would serve to benefit competitors like South Korea-based Samsung Electronics Co. Apple also made multiple announcements during Trump’s first term about US investments and credited Trump with Mac Pro manufacturing in Texas despite its manufacturing computers there since 2013.”

“In exchange, Apple was able to retain its high profit margins and avoid significantly raising product prices during Trump’s first presidency. With Trump again in office with a similar plan to push US companies to build goods in the US to avoid taxes on foreign imports, Apple is taking a similar tact with a strategic investment announcement that will meet Trump’s desires.”

And as the WSJ explains in “Apple’s $500 Billion U.S. Investment Is Mostly Already in the Books”,

“Expansion plan in America is in line with company’s spending pattern and efforts to diversify manufacturing away from China.”

Apple continues to balance the AI realities of its global business, with the geopolitical priorities of the times.

Be they in the US, or in further away places like India and China. Expect to see more of the same by most of the big tech companies in this AI Tech Wave in the near term. Stay tuned.

(NOTE: The discussions here are for information purposes only, and not meant as investment advice at any time. Thanks for joining us here)