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3 Months : From Jun 2018 to Sep 2018
By Tripp Mickle
Apple Inc. said it would launch a $300 million clean-energy fund for China with 10 of its suppliers, extending the U.S. tech giant's commitment to China at a time of mounting trade tension between its home country and its most important overseas market.
The China Clean Energy Fund, which Apple said it and its partners will fund over four years, will invest in and develop-clean energy projects totaling more than 1 gigawatt of renewable energy in the country. Those investments will be used to power operations of the 10 participating suppliers, including Taiwan-based Pegatron Corp. and Wistron Corp., which assemble iPhones.
Apple has gone on a charm offensive in China in recent years as it has looked to shore up its relationship with the Chinese government and consumers. Chief Executive Tim Cook, who travels regularly to the country, last year spoke at a major Chinese government conference, around the time Apple announced investment in two research-and-development centers in Shanghai and Suzhou.
Those efforts have taken on added importance amid an intensifying trade battle between the U.S. and China.
The Trump administration early this month imposed a 25% tariff on $34 billion in Chinese imports and has scheduled another $16 billion to hit later this month. China has responded with tariffs on 545 items, including agricultural products.
The trade fight thrusts Apple into a difficult position. The company assembles most of its iPhones in China and imports them to the U.S., which accounts for about 30% of its $229 billion in total sales, according to analysts. Meanwhile, China has grown to become one of its largest markets, accounting for about 20% of total sales.
That straddling of the U.S.-China divide creates risks for Apple that Chinese officials could see its market position there as a bargaining chip with Washington, analysts say. The concern is that the Chinese government could find ways to slow approval of Apple products at customs or stir consumer sentiment against the company. "As this ratchets up, Apple should be concerned," said Mary Lovely, a professor of economics at Syracuse University.
The China Clean Energy Fund fits into Apple's ongoing efforts to reduce its environmental impact. The company announced in April that it had achieved its decade-old goal of having its facilities world-wide powered exclusively by renewable energy, including retail stores, offices, data centers and partner data centers, as well as its new headquarters in Cupertino, Calif.
The investment also aligns with goals of China's government, which has prioritized renewable energy to wean the country off its reliance on coal power and address public dissatisfaction with rampant air pollution in its cities.
The China Clean Energy Fund will be managed by Deutsche Bank AG's DWS Group, which also will invest in the fund, Apple said. Apple's largest iPhone assembler, Foxconn Technology Group, isn't participating in the fund.
The fund is the latest example of Apple using its balance sheet to support public policy interests in its most important markets. Since May last year, it has committed $5 billion toward an advanced manufacturing fund supporting U.S. manufacturing. It had faced criticism during the presidential campaign from then-candidate Donald Trump for outsourcing the production of iPhones to factories in China.
Write to Tripp Mickle at Tripp.Mickle@wsj.com
(END) Dow Jones Newswires
July 12, 2018 19:24 ET (23:24 GMT)
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