AAPL Apple Inc

By Timothy W. Martin and Russell Gold 

Apple Inc. said it plans to invest $1 billion building a new corporate campus in Austin, Texas, promising to create as many as 15,000 jobs, as it and a handful of other tech giants expand their footprint well beyond the West Coast.

The Cupertino, Calif.-based iPhone maker said it would also establish new offices in three cities -- San Diego, Seattle and Culver City, Calif. -- where it said it would add more than 1,000 employees in each place. Over the next three years, Apple said it would add hundreds of jobs in cities where it already has offices, including New York, Boston and Portland, Ore.

Some of the new jobs are part of initiatives that Apple had previously announced. Still, the specific cities named for new offices and expansions came as a surprise. The announcement follows big, new investment and job-creation plans by other big tech firms, including Amazon.com Inc. and Alphabet Inc.'s Google.

All three companies have been eager to claim credit for creating American jobs as their profits soar. President Trump has applied specific pressure to Apple, calling on it repeatedly to bring manufacturing jobs home from Asia.

Apple representatives weren't available to comment on the details of their plans early Thursday. In a press release, Chief Executive Tim Cook said Apple is "redoubling our commitment to cultivating the high-tech sector and workforce nationwide."

The secrecy of the site-selection process by Apple -- which made its announcement at midnight California time -- contrasted sharply with Amazon's public search for its second headquarters. Amazon spent months narrowing down a list of candidate cities, ultimately deciding to split the new headquarters between New York City and northern Virginia. The search triggered a race among competing cities to woo Amazon with tax benefits and other enticements.

The e-commerce giant is promising the prospect of as many as 50,000 jobs as part of that expansion. Google, too, is expanding quickly, saying it will bolster its workforce in New York City, planning to add more than 14,000 new jobs there over the next decade.

Apple, meanwhile, has been quietly meeting with local officials for months. Mr. Cook said in March that Apple wouldn't be discussing its search because it doesn't believe in the "beauty contest" approach.

Apple's release didn't mention whether it had received any tax incentives from any local governments.

All three companies have been under pressure to show the huge profits they have generated are benefiting the U.S. economy more broadly. That pressure has only increased amid political and popular backlashes on several fronts -- including worry about the industry's use of personal data and what many critics see as the tech giants' growing and unchecked influence across an array of industries.

By choosing Austin as its marquee job-creation locale, Apple, unlike Amazon and Google, is expanding its footprint significantly in the middle of the country, instead of the East Coast. Cities like New York, Boston and the greater Washington, D.C., area have long attracted top tech talent, setting up fierce competition there. That's been less intense in much of the interior of the country, though cities like Austin, Atlanta and Nashville have all enjoyed a fair share of tech investment.

Apple's new campus will initially hire 5,000 workers. That total could triple in future years, Apple said. Earlier this year, Apple said it would invest $30 billion in capital spending in the U.S. over five years, creating more than 20,000 jobs. Apple says it employs 90,000 people in the U.S. and has added 6,000 jobs to the American workforce this year.

That capital spending sum included a new campus, which the company said will initially house technical support for customers. The investment promise also included $10 billion toward data centers across the country.

Mr. Cook has been under pressure by Mr. Trump over the company's outsourcing of the iPhone and other devices' production to factories in China. In an interview with The Wall Street Journal in 2017, Mr. Trump said Mr. Cook has committed to building three big manufacturing plants in the U.S.

The expansion comes as Apple faces headwinds. Apple shares have sunk more than 25% since early October, shedding more than $300 billion in market value, driven in part by investors' concerns about the future of the iPhone.

Austin was an early candidate in Amazon's search, too, but ended up losing to larger East Coast cities. Apple's decision is likely to come as a big psychological boost for the city, apart from any economic benefit.

Austin has shed its slacker college-town past and embraced a new image as a high-tech employment hub. In addition to Apple, Google and Facebook Inc. have all opened large offices in Texas' capital city. Home prices have risen, as have median incomes and commuting times.

A longtime lure of Austin, which once promoted itself as the Silicon Hills, has been its low cost of living, compared with San Francisco or New York, and lack of a state income tax. The metro-area population of 2.1 million residents is younger and significantly better educated than the rest of Texas and the U.S. It hosts a parade of music festivals through the year and a surfeit of high-end restaurants. All that has made it attractive to the type of younger workers that firms want to hire.

The city was a bit of a dark horse in the quest to land Amazon's second headquarters, dubbed HQ2. Amazon acquired Austin-based Whole Foods and its downtown headquarters in 2017, making it an Amazon company town of sorts already. But Austin's relatively small airport, crowded highways and underdeveloped mass transit system struggle to match what Amazon said it was looking for in a headquarters city.

The Austin area is also home to Dell Technologies Inc., while chip giant NXP Semiconductors NV has a major presence there after buying Freescale Semiconductor in 2015. Many videogame companies have studios around town.

The new 133-acre Austin campus will be located less than a mile from Apple's existing facilities. Apple already employs 6,200 people in Austin, the largest group of employees outside of its Cupertino headquarters. Newly created jobs will be in areas such as engineering, finance and sales, Apple said.

It is unclear if any of the new sites will include manufacturing facilities. Kylie Huang, a Taiwan-based analyst at Daiwa Capital Markets, said the U.S. job expansions won't likely have a significant effect on Apple's supply chain. "I think it's more a gesture" that shows Apple's intention to invest more into the U.S., Ms. Huang said.

Most of Apple's devices, including the iPhone and iPad, are assembled in China by its contract manufacturers such as Taiwan-based Foxconn Technology -- formally known as Hon Hai Precision Industry Co. -- and Pegatron Corp.

Analysts and people familiar with Apple's operations say it isn't easy to shift production out of China. Much of the electronics supply chain is based in China and neighboring countries, and many steps of assembling the iPhones still rely on the hands of hundreds of thousands of workers. To shift iPhone production to the U.S. from China would mean Apple, or its contract manufacturers, must secure an army of seasonal workers capable of doing precision assembly -- not an easy task, they said.

Yoko Kubota and Stu Woo contributed to this article.

Write to Timothy W. Martin at timothy.martin@wsj.com and Russell Gold at russell.gold@wsj.com

(END) Dow Jones Newswires

December 13, 2018 09:51 ET (14:51 GMT)

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