Why Are Tech Giants Flocking to the Hawkeye State?

September 07, 2017

By Amar Bhatkhandé, CPA, CA

Apple announced that it is building a pair of data centers in Iowa, just outside Des Moines in Waukee. The company is reportedly investing $1.3 billion to cover the cost of land, construction and equipment. Apple is also investing $100 million in local infrastructure and community projects such as parks and libraries.

The 400,000 square-foot data centers will be built on 2,000 acres of land surrounded by the state’s signature corn fields. They are designed to better serve iMessage, Siri, App Store and other Apple customers in North America. The facilities will use 100% renewable energy and hope to be in operation by 2021. Apple has set an ambitious goal to power all of its operations around the world with renewable energy.

The project expects to create more than 500 construction jobs and 50 permanent jobs. Jobs must pay at least $29.12 per hour under Iowa’s incentive program.  Apple is currently responsible for 10,000 jobs across Iowa.

So why Iowa? Apple CEO Tim Cook has cited the state’s workforce; land availability; affordable energy, much of it derived from wind; access to high-speed fiber optics; and a relative stable climate free of hurricanes and earthquakes. Of course, let’s not forget the economic incentive. Apple stands to receive $208 million in local and state tax breaks.

In recent years, other tech giants have planted roots in Iowa. Google has invested $2.5 billion in Council Bluffs; Facebook is breaking ground on a $1.5 billion project in Altoona; and Microsoft announced a new data center in West Des Moines, which brings its investment to $4 billion in the Hawkeye State.

With all the talk of tax reform (Apple has $261 billion in cash parked overseas), these do represent significant investments by major technology companies in the U.S.

About Amar Bhatkhande

Amar Bhatkhandé is an Audit Partner and a leader in the Life Sciences and Technology Services Group for the firm's West Coast practice, with over 25 years of experience in public accounting and 2 years in private.