“OK, iPhone sales rose in the third quarter — and Apple’s shares are trading at an all-time high after its earnings report Tuesday,” Levi Sumagaysay writes for The Mercury News. “But hold the Champagne: Tim Cook still had to answer a couple of tough questions during the earnings call, such as whether he really told President Trump that Apple is going to build three ‘beautiful’ manufacturing plants in the United States.”
“Last week, Trump said in an interview with The Wall Street Journal that Cook had ‘promised’ him three U.S. plants in private, and that it would be ‘big, big, big,'” Sumagaysay writes. “So Tuesday, Cook gave a long-winded response to whether he promised Trump those plants.”
Cook said, “‘We’ve created 2 million jobs in the U.S., and we’re incredibly proud of that… We do view that we have a responsibility in the U.S. to increase economic activity… including increasing jobs, because Apple could only have been created here,'” Sumagaysay writes. “Apple’s CEO went on to tout what else the Silicon Valley company is doing to boost the American economy.”
Sumagaysay writes, “Still, none of that is a yes to what Trump said Cook promised him.”
Read more in the full article here.
MacDailyNews Note: Cook did say, “…We have about two-thirds or so of our total employee base is in the U.S. despite only a third of our revenues being here, and we’ll have some things that we’ll say about that later in the year.”
The full exchange, verbatim:
Steven Milunovich – UBS Securities: Okay, and then a government question. First of all, the President suggested that you may build three big beautiful plants. I wonder if you can comment on if that’s a possibility either directly or indirectly. And then in China, I think, we all understand that you have to work within the regulations, but maybe you could comment a bit on how you feel your working relationship is with the government and if there is certain lines that you can’t cross.
Tim Cook: Sure. Starting with the U.S., let me just take this question from what are we doing to increase jobs, which I think is probably where it’s rooted. We’ve created 2 million jobs in the U.S., and we’re incredibly proud of that. We do view that we have a responsibility in the U.S. to increase economic activity, including increasing jobs, because Apple could have only been created here. And so as we look at that 2 million, there are three main categories of that, and we have actions going on in each of them to further build on that momentum.
The first category is app development. About three-quarters of the 2 million are app developers. And we’re doing an enormous amount of things to deliver curriculum to both K-12 with Swift Playgrounds in the K-to-6 area, other curriculum as you proceed beyond grade 6 under the Everyone Can Code area. And just a couple months ago, we announced a new curriculum that’s focused on community schools and community colleges, junior colleges, technical colleges, for kids that did not have coding in their elementary and high school years. And so we’re excited about that because we think it could increase the diversity of the developer community and the quantity. And I think this area in general and all the things we do for the developer community will be the largest contribution that Apple can make because this is the fastest growing job segment in the country, and I think will be for quite some time.
If you look at the second area, we have purchased – or we purchased last year about $50 billion worth of goods and services from U.S.-based suppliers. Some significant portion of those are manufacturing-related, and so we’ve asked ourselves what can we do to increase this. And you may have seen that at the beginning of the quarter, sometime in April I believe, we announced a fund, an Advanced Manufacturing Fund, that we’re initially placing $1 billion in. And we’ve already deployed $200 million of that. And the first recipient is Corning in Kentucky, and they’ll be using that money to expand the plant to make very innovative glass. And we purchase that glass and essentially export it to the world with iPhones and iPads.
We think there’s more of these that we can do. I think there are probably several plants that can benefit from having some investment to grow or expand or even maybe set up shop in the U.S. for the first time, so we’re very excited about that.
And then the third area is we have about two-thirds or so of our total employee base is in the U.S. despite only a third of our revenues being here, and we’ll have some things that we’ll say about that later in the year. And so that’s what we’re doing from a job growth point of view, and we’re very, very proud of that.
Now turning to China, let me comment on what I assumed is at the root of your question about this VPN issue. Let me just address that head on. The central government in China back in 2015 started tightening the regulations associated with VPN apps, and we have a number of those on our store. Essentially, as a requirement for someone to operate a VPN, they have to have a license from the government there. Earlier this year, they began a renewed effort to enforce that policy, and we were required by the government to remove some of the VPN apps from the App Store that don’t meet these new regulations. We understand that those same requirements are on other app stores, and as we checked through that, that is the case.
Today there are actually still hundreds of VPN apps on the App Store, including hundreds by developers that are outside China, and so there continues to be VPN apps available. We would obviously rather not remove the apps, but like we do in other countries, we follow the law wherever we do business. And we strongly believe that participating in markets and bringing benefits to customers is in the best interest of the folks there and in other countries as well. And so we believe in engaging with governments even when we disagree.
And in this particular case, now back to commenting on this one, we’re hopeful that over time the restrictions that we’re seeing are loosened because innovation really requires freedom to collaborate and communicate, and I know that that is a major focus there. And so that’s what we’re seeing from that point of view.
Some folks have tried to link it to the U.S. situation last year, and they’re very different. In the case of the U.S., the law in the U.S. supported us, which was very clear. In the case of China, the law is also very clear there. And like we would if the U.S. changed the law here, we’d have to abide by them in both cases, that doesn’t mean that we don’t state our point of view in the appropriate way. We always do that. And so hopefully that’s a little bit probably more than you wanted to know, but I wanted to tell you.
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