Apple plans to perform 'high-tech manufacturing' of data center gear in Arizona
A notification published by the Federal Register on Monday says that Apple is looking for approval from the Foreign-trade Zones Board to produce "finished products" in a special zone that exempts it from customs duty payments.
"Apple Inc has repurposed the site as a global data command center that will conduct high-tech manufacturing of finished data center cabinets for other data centers," according to a document filed by Mesa, Arizona on behalf of Apple in June 2016 and made public on Monday.
The filings comes as Apple has come under fire by President Elect Donald Trump for producing the iPhone and other popular products overseas.
The Arizona effort would mark a rare instance of a US tech company manufacturing and assembling a finished product domestically, where labor costs are higher. Apple's effort appear limited to equipment for its internal operations however, rather for than a mass-market consumer product.
"The nature of the product is not for end users but for other global data centers what will be supported from the site," Apple said in the June filing.
The servers Apple uses in facilities such as its data centers in Oregon and North Carolina are currently built and tested on-site, according to a person with knowledge of Apple's data operations. Now, Apple is consolidating that work in Mesa, Arizona, where it will build and configure its servers before shipping them to other American data centers, the person said.
Apple owns a huge facility in Mesa, Arizona, which was formerly leased to a supplier in order to build sapphire screen coverings, which is when the facility first applied for and received its special status.
More recently, after that supplier declared bankruptcy, the facility has been transformed into a "global command center" to store and serve iCloud backups and iTunes.
Import and Export
The document notes that the final product will be shipped domestically and exported and that the manufacturing facility will "utilize personnel with extensive education and allow Apple to offer best in class data support."
Monday's filing notes that production at the facility could include imported materials and components including "sever housing and enclosures" as well as "routers and network switches."
Essentially, foreign-trade zones are outside of U.S. customs territory, which means that companies can avoid import and export duties when exporting or important merchandise. The United States government supports the zones to help create jobs through "the encouragement of operations in the United States which, for customs reasons, might otherwise have been carried on abroad."
"On its domestic sales, Apple would be able to choose the duty rate during customs entry procedures that applies to finished server assembly cabinets (duty-free) for the foreign-status materials/components noted below and in the existing scope of authority," the notice continues.
International Trade Administration and Mesa, Arizona officials did not immediately return a request for comment.
Global command center
The facility, which is enormous, is bigger than most data centers, and was originally a manufacturing plant. It would make sense as a location for Apple to coordinate building hardware for its data centers around the world, including Ireland, Denmark, and other locations.
Apple has been working on projects to design its own servers, The Information reported in March, mostly to ensure that the hardware is secure. Apple reportedly has found that servers it buys off-the-shelf may have had hardware and software added to them to make them vulnerable to infiltration.
Apple has said that it is planning to start with 150 "high-paid" positions at its Mesa "command center," and the Arizona government has said that Apple said that it plans to have an full-time executive working out of the facility.
In October, Apple started hiring services technicians, managers, engineers, and other operations professionals to work at the Arizona facility.