Apple Spent $500 Million on This...

By Brad Thomas, Editor, Wide Moat Daily

"These jobs aren't coming back."

That's what Apple (AAPL) co-founder and then-CEO Steve Jobs told President Barack Obama in February 2011.

It was at a private dinner Obama threw for Silicon Valley, including (pre-Meta) Facebook's Mark Zuckerberg and Eric Schmidt, who was still running Google (not yet Alphabet).

At one point, Obama turned to Jobs with one question: "What would it take to make iPhones in the United States?"

The answer was a decided negative, and not just because of labor costs. China, where Apple was making almost all its products, was apparently preferable in every single way as a manufacturing base.

The facilities were already built, and the workers were already trained, reliable, and fast. That's the way it had been since the 1990s, and Jobs saw no reason to change a thing.

The cost of altering this system was unthinkable.

Sure enough, Apple kept that status quo all the way through 2016, years after Jobs passed away. It wasn't until 2017 when the tech giant began assembling some iPhones in India.

Interestingly, that move was made to protect against Trump's China-specific tariffs during his first term. Yet when Trump began to pressure companies to bring manufacturing back to the U.S. this time around, the media was quick to respond with headlines like:

And while Apple's unlikely to relocate the actual assembly facilities to the U.S., the company did just announce that some of the critical inputs for the products will be sourced right here.

Apple's Big Investment in Rare Earths

Apple might be completely committed to cheap overseas manufacturing (for now). But it's pledging more and more money to the U.S. – including through its latest big contract.

From CNBC:

"MP Materials Stock Rips 20% Higher After $500 Million Apple Deal for Rare Earth Magnets."

I've written about the rare earth metals situation before, but it's important to reiterate how important these materials are.

They're used in wind turbines, solar panels, computers and smartphones, electric vehicle batteries, magnets, lights, and so much more.

As I put it in February, "without rare earth minerals, the world as we know it would be dead in the water. So, it's pretty problematic that the world gets 70% of this resource group from a single country: China."

This is due to a number of reasons, including how rare earths – which aren't really all that rare – are difficult to access, especially when you take environmental and safety considerations into account. China doesn't tend to prioritize such concerns, whereas most Western countries do.

That's why the U.S. only has one operating mine: California's Mountain Pass, owned by MP Materials (MP)... which Apple just signed its $500 million contract with.

The deal involves building a new recycling facility in Mountain Pass to reprocess used electronics. And Apple will help MP Materials establish another plant in Fort Worth, Texas, to create magnets which will be used in Apple devices in the years ahead.

Keep in mind that this is on top of the $500 billion it pledged to U.S.-based development back in February. While none of that will fund manufacturing, it's still an enormous national investment that almost certainly wouldn't have happened without some "prodding" from the Trump administration.

And Apple's not the only one making deals with MP. The Department of Defense ("DoD") also purchased $400 million in preferred stock, making it the single largest shareholder. Like Apple, the DoD will purchase magnets from MP in the years ahead.

In both the private and public sector, the lesson seems to be the same: All else equal, it's probably not a bad idea to have such a key supplier in your own backyard.

American Investments Are Soaring

In an interview late last year, I said:

When it comes to trade relations, Donald Trump has a carrot and a stick. He wants the counterparty to take the carrot. But that stick only means something if you demonstrate that you're willing to use it.

The recently-signed Big Beautiful Bill – with permanently lowered corporate tax rates and bonus depreciations clause – is the carrot. But Trump also has that stick – tariffs.

And for all the bluster we hear about tariffs, they do seem to be working.

I've written about all the investments pouring into the U.S. more than once, including just last week. So, I won't go down the whole list again. Suffice it to say that it amounts to over $3 trillion so far.

We then learned on Tuesday that a slew of companies will be adding tens of billions more into Pennsylvania specifically. Apparently, Big Tech has decided that the Pittsburgh area is a great place to build out artificial intelligence (“AI”) campuses... and some of them are already establishing two-year plans to make it happen.

Google, for one, has pledged $25 billion into building up AI-specific infrastructure – including data centers – in and around the city lines. Private-equity firm Blackstone is investing in the same. And power companies First Energy and Constellation Energy, as well as CoreWeave, are contributing smaller but still significant amounts.

Commerce Secretary Howard Lutnick pointed out how, "Pennsylvania's robust energy resources and power infrastructure make it a unique location for data centers. It's the combination of technology, investment, and power accessibility that makes a location key and successful."

And that's true.

But it was also true last year, and the year before, and the year before while the artificial intelligence craze swept the country. It wasn't until President Trump began to enact his international tariffs and national economic policies that foreign and domestic companies alike began to get moving on these projects.

This strikes me as a new era. Apple may never bring iPhone manufacturing operations home. But the idea of making large investments in American-based infrastructure like mining, rare earth processing, and technology infrastructure is no longer unthinkable.

Steve Jobs was probably right. "Those jobs" aren't coming back. But there's plenty of reason to believe there will be plenty of new ones in the years ahead.

Regards,

Brad Thomas
Editor, Wide Moat Daily