Apple Sets $300 Million Clean Energy Fund for China Amid Trade Tensions -- Update
July 12 2018 - 7:39PM
Dow Jones News
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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