Apple Inc. announced plans to accelerate spending in the United States, citing $350 billion of spending over the next five years. The company has cited recent tax rules and its status as being the largest US taxpayer. The company specifically earmarked "over $10 billion" for "investments in data centers across the US." We estimate that this will add about $2 billion more per year than the company was already spending, which the company says has resulted in datacenters in seven US states, including North Carolina, Oregon, Nevada, Arizona and a planned project in Iowa. Based on these estimates, we believe Apple's US datacenter spending rate will now challenge the capital spending rates of Facebook. The company also announced plans to build a Reno, Nevada datacenter.
This capital spending acceleration on datacenters has been timed with the completion of its Cupertino-based mega-campus, which was a significant capital expenditure.
With Apple's datacenter plans are clearly accelerating, it is poised to tap suppliers for more datacenter equipment. We expect that the main suppliers of network equipment will be fighting hard for Apple's business. Examples of such suppliers competing for the new capital spending plan will likely be, in optical equipment, Nokia, Ciena, Finisar, in routing, Nokia, Cisco, and in switching, Cisco, Broadcom, and Arista. It is possible that with Apple's increasing scope of datcenter building, it may seek to bring more equipment design in-house, more similar to larger datacenters, including Facebook, Microsoft, Amazon and Google. Additionally, as the datacenters become more numerous and larger, it will almost certainly require that Apple will implement different network architectures.