Apple Is Expanding to the East Coast

Written by Jennifer Clark
Posted May 5, 2021

Apple (NASDAQ: AAPL) has committed $430 billion in U.S. investments over the next five years to help with the recovery from the coronavirus pandemic. Apple is expecting that this investment from the company could add around 20,000 new jobs nationwide over the next five years. Apple's CEO, Tim Cook, had this to say in a statement about the investment:

At this moment of recovery and rebuilding, Apple is doubling down on our commitment to U.S. innovation and manufacturing with a generational investment reaching communities across all 50 states. We're creating jobs in cutting-edge fields — from 5G to silicon engineering to artificial intelligence — investing in the next generation of innovative new businesses, and all our work, building toward a greener and more equitable future. 

Apple also plans to increase its direct spend with more than 9,000 American suppliers and companies in every state, data center investments, capital expenditures, and other domestic spending like Apple TV+ productions across 20 states, which will increase and support the creative industry. This is an investment from one of the major tech companies in America and is a much-needed investment as Americans need jobs. Unemployment in the U.S. has been at all-time highs, and as a result, millions of people have left the workforce and are out of a job. As more Americans get vaccinated, it's still going to be a long, slow road to recovery, and help from companies like Apple will be important. According to Pew Research, "Employment in February 2021 was 8.5 million, which was less than in February 2020, a loss that could take more than three years to recoup assuming job creation proceeds at roughly the same monthly rate as it did from 2018–2019."

As part of Apple's investment into the U.S., it plans to put over $1 billion into North Carolina. Apple will build a new campus and engineering hub in the Research Triangle area, which is the collection of North Carolina State University, Duke University, and the University of North Carolina. This new campus is expected to employ 3,000 people in the technology industry in areas like software engineering and machine learning. This will bring job opportunities to the North Carolina area and the East Coast. It will most likely attract talented local technology workers and others who are looking to move out of more expensive major cities. For decades in the tech industry, there has been a high focus on certain cities, and if you were looking for a job, those cities where you needed to go to get one. For most people involved in the industry, California was the place to go to get that dream job. However, that seems to be shifting as major tech companies are moving out of the popular California cities or out of California altogether. 

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The Silicon Valley area has high housing prices and cost of living, which is a huge con when trying to attract talent. It’s a big decision to move, but it’s an even bigger decision when you’re moving to a state with a high cost of living and high house prices. Calfornia-based Oracle (NYSE: ORCL) has announced plans to move its headquarters to Austin, Texas, and Google (NASDAQ: GOOG) recently announced that it has plans to spend $1 billion on a new campus in New York City. Companies are realizing that they don't have to stay put in these cities, and can instead expand and open up their business to new talent in other states. Apple’s North Carolina campus is going to have a huge impact on North Carolina, its economy, and its people. 

Apple plans to establish a $100 million fund to support schools and community initiatives in the Raleigh-Durham area and across the state, in addition to a $110 million infrastructure investment that will go toward broadband, roads, bridges, and public schools in the 80 North Carolina counties with the greatest need. Dr. John Connaughton from UNC Charlotte’s Belk College of Business had this to say about how Apple’s plans will have on North Carolina’s economy, saying:

By 2029, Apple’s investment and job creation is expected to generate at least $1.5 billion annually for the state of North Carolina. 

Some of these U.S. cities have been neglected by these major companies and and their economies have suffered, but if other companies follow Apple's lead and start investing in other states' economies, the country as a whole is going to greatly benefit. Not to mention these companies could also experience the benefits of these new plans and investments. 

Apple reported its second-quarter 2021 financial results on April 28. Apple reported that iPhone, Mac, and iPad sales all outperformed Goldman Sachs’ expectations. The company’s second-quarter 2021 financial results indicated that revenues jumped up about 54%, to $89.9 billion, and gross margin increased to $38.1 billion.

During the earnings call, Apple’s CFO, Luca Maestri, said:

We are proud of our March quarter performance, which included revenue records in each of our geographic segments and strong double-digit growth in each of our product categories, driving our installed base of active devices to an all-time high.

Analysts were expecting Apple to reveal earnings that would crush estimates, and those analysts got what they were expecting.

Until next time,

Jennifer Clark

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