Apple will boost its spending on data centers by $10 billion over the next 5 years

Key Points
  • The commitment comes a few months after Apple said its capital expenditures, including data center spending, would grow by 7.5 percent in 2018.
  • The move comes amid continuing revenue growth from services like Apple Music, which use Apple's data center infrastructure.
Fmr. Apple CEO on Apple jobs announcement: Tim Cook is setting the benchmark
Fmr. Apple CEO on Apple jobs announcement: Tim Cook is setting the benchmark

Apple is increasing the amount it plans to spend on data centers by $10 billion over the next five years, the company said in its announcement on Wednesday about contributing $350 billion to the U.S. economy.

The buildout will help Apple support its growing web services, like the App Store and Apple Music. Services is Apple's fastest growing business, outpacing revenue growth in key products like iPhones and iPads. Apple has said it aims to double its services revenue from $24 billion in its 2016 fiscal year to $48 billion by 2020.

Perhaps more important, the new spending could make room for Apple to spend less money on other companies' cloud services. Apple has relied on Amazon Web Services and Microsoft Azure to meet its computing needs, despite that it competes with those companies in certain areas.

Apple did not explicitly say it aims to reduce spending on third-party cloud providers, and declined comment on that aspect of Wednesday's news. But Apple has explored that area in past years.

"Over $10 billion of Apple's expanded capital expenditures will be investments in data centers across the U.S.," Apple said in a statement on Wednesday.

The word "expanded" shows the $10 billion will be on top of Apple's existing data center spending. In November Apple said it would spend about $16 billion in capital expenditures, including spending on data centers, in 2018. That number shows a roughly 7.5 percent increase year over year. It's not clear what percentage of Apple's capital expenditures in a given year go toward data centers.

Apple has also been spending money to set up new data centers in Europe, and last year the company announced plans to build its first data center in China in partnership with a Chinese company.

By way of comparison, Microsoft had $10.2 billion in capital expenditures in its 2017 fiscal year (which ended June 30, 2017), up nearly 15 percent.

In 2016 Alphabet's Google business, which includes its public cloud, had $9.4 billion in capital expenditures, representing 6 percent growth.

Amazon, whose Amazon Web Services segment leads the public cloud market, had cash capital expenditures totaling $6.7 billion in 2017, up 45 percent.

WATCH: What Apple's move means to the economy

What Apple's move means to the economy
What Apple's move means to the economy