Apple to hire 20,000, open new campus and pay $38 billion tax bill on overseas profits

Jefferson Graham | USA TODAY

Show Caption Hide Caption Apple says it's building a new campus and hiring more employees Apple announced plans to open a new campus as part of an effort that will see Apple hire 20,000 new workers over the next five years. The location of this new facility will be announced later in the year.

LOS ANGELES — Apple, which has come under major criticism for building much of its popular products in China, announced a sweeping set of moves partially tied to the recent tax bill, including paying $38 billion in taxes from profits made overseas and opening another corporate campus.

The iPhone maker said it also will make $30 billion in capital expenditures in the U.S. over the next five years, in part from opening data centers to feed growing demand for services like iCloud. And it will create over 20,000 new jobs at existing Apple campuses and a new one, initially for technical support, at an unnamed location, likely setting off a scramble among states and cities vying for bragging rights.

The company is the latest to announce new payouts tied to the tax bill, a landmark win for President Trump and the Republican-led Congress, which say the lower corporate rate should lead to faster job growth, higher corporate profits and steeper wages, as companies take some of those tax savings and invest them. Critics have warned companies may instead funnel their savings into buybacks and dividend increases, side-stepping workers.

I promised that my policies would allow companies like Apple to bring massive amounts of money back to the United States. Great to see Apple follow through as a result of TAX CUTS. Huge win for American workers and the USA! https://t.co/OwXVUyLOb1 — Donald J. Trump (@realDonaldTrump) January 17, 2018

Apple is also giving $2,500 stock bonuses to most of its 138,126 employees worldwide, which will roll out in the next months. Shares ended up 1.7% at $179.10.

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More: A rare look inside Apple’s expanding Reno data center

The company is shouldering a big tax bill as the iPhone maker brings back much of its estimated $252 billion cash held overseas, quieting another long-standing complaint from lawmakers: that the world's most valuable company avoids paying some U.S. taxes because it keeps so much of its profits outside the U.S. Apple said the $38 billion payment would likely be the largest of its kind.

"Apple is a success story that could only have happened in America, and we are proud to build on our long history of support for the U.S. economy," said Tim Cook, Apple's CEO.

Cook had long said Apple would bring back some of those profits if the U.S. were to lower the corporate tax rate. At the same time, the company is realizing a savings of $42 billion from the new tax bill, notes analyst and investor Gene Munster, from Loup Ventures, as it takes advantage of a one-year window that lowers the tax rate on repatriated profits to 15.5%. That's less than the 21% tax rate on corporate profits from the new law, itself a drop from the 35% prior rate.

In a news release, Apple didn't mention moving production of iPhones to the U.S. They are currently designed at Apple's headquarters in Cupertino, California, but built at the Foxconn plants in China.

Critics have asked why Apple couldn't produce the iPhones here, and in response, Cook has said that it's not just the cost of paying foreign workers lower salaries, but training. Manufacturing and keeping the production lines running for a company that produces over 200 million iPhones yearly is something Chinese factories excel at, Cook told CBS's "60 Minutes" in 2015.

Instead, it will focus its capital expansion on data centers — spending $10 billion on adding more like the kind it broke ground on in Reno, Nev. Thursday — and the new Apple campus. Apple already employs 84,000 people in all 50 states.

With the new investments and its current pace of spending with U.S. suppliers and manufacturers, which it expects to total $55 billion this year, Apple said its contribution to the U.S. economy will be more than $350 billion over the next five years.

Re-investing the savings buffers the company against the notion is Apple benefitting from the bill but keeping all the money, says Patrick Moorhead, an analyst with Moor Insights.

However, jobs at data centers and technical support may not represent the high-paid software and business jobs that have created wealthy hubs in Seattle, San Francisco, Los Angeles and New York. Data centers typically operate with minimal staff, and according to Glassdoor.com, the average yearly salary for tech support pros is just over $36,000.



Moorhead said he expects the new location to be in "flyover" country, somewhere in the middle of the United States, where so many Apple consumers live.

Amazon set off a intense race among over 200 cities and states last year after it announced it planned to choose one for a second headquarters that would employ 50,000 and take $5 billion to build.

Apple's new digs won't be a second HQ to its Cupertino, Calif. headquarters, which recently reopened as Apple Park, a $5 billion sprawling campus whose main building resembles a flying saucer.



