Apple, Inc. Is About to Expand U.S. Manufacturing, but It's Not What You Think
By Evan Niu, CFA
Too bad we're not talking about iPhone manufacturing. Image source: Apple.
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Expanding domestic manufacturing is the popularthing to do right about now, as President-elect Donald Trump prepares to take office in just 10 days. We've already seen a handful of domestic companies cave to the political pressure, altering investment plans to focus on U.S. facilities in some cases. Apple (NASDAQ: AAPL) has also been dragged into the debate , for better or for worse. Well, the Mac maker is now reportedly looking to expand its operations in Mesa, Arizona, and begin "high-tech manufacturing," according to government documents first noticed by Business Insider yesterday.
Apple is looking to assemble data center cabinets at the facility, and they would be destined for use in Apple's other data center facilities around the world. The company currently assembles data center gear at each respective site, but this move would consolidate the assembling in Mesa. Finished equipment will be shipped to other Apple data centers within the U.S., according to the report.
Might as well use it
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This is really about Apple continuing to repurpose its Mesa, Arizona, facility, which you may recall was initially built to be a massive manufacturing site for sapphire glass back when the iPhone maker had partnered with GT Advanced Technology, which went bankrupt in late 2014 as a way to extricate itself from the ill-fated supplier relationship. Apple had built the facility and was to rent it out to GT Advanced, and the surprise bankruptcy announcement left Apple with 1.2 million square foot of space to repurpose.
In early 2015, Apple said it would invest $2 billion in the facility to convert it to a green data center that would serve as a sort of control center for the company's four other domestic data centers. The Mesa, Arizona, facility would also focus on storing iCloud and iTunes data. For the past few years, Apple has been quietly designing its own servers and other back-end infrastructure, in part to improve security.
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As far as jobs go, Apple will initially add approximately 150 "high-paid" jobs at the facility, according to the report. That's good news for the local economy, but ultimately a drop in the bucket. It's also not as if Apple is expanding the operations for political purposes. The move is more about utilizing a facility that Apple had already bought and paid for.
It looks like Trump will just have to keep on fighting for domestic manufacturing jobs, since this isn't quite what he's looking for.
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Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2018 $90 calls on Apple and short January 2018 $95 calls on Apple. The Motley Fool has a disclosure policy .