Facility to help localize iCloud services in world's largest smartphone market

Apple Inc will invest at least 1 billion yuan ($160 million) as part of its plan to build a second data center in China, as the United States tech giant accelerates steps to localize its iCloud services in the world's largest smartphone arena, according to a source familiar with the matter.

The data center, located in North China's Inner Mongolia autonomous region, will be put into operation in 2020 and Apple's investment into fixed assets related to the project, including buildings and other basic infrastructure, will total around 1 billion yuan, the source said.

The figure does not include costs relating to servers, which will account for most of Apple's investment in Inner Mongolia, added the source, who declined to be named as he is not authorized to speak publicly about the matter.

The move follows Apple's announcement in July 2017 that it will build its first China data center in Guizhou province, in the southwest of the country. The project will also receive $1 billion in investment and be put into operation in 2020.

The two centers will be operated by Guizhou-Cloud Big Data Industry Co Ltd, an enterprise owned by the Guizhou provincial government, the source added. They are designed to comply with China's new cybersecurity laws and to meet local consumers' growing appetite for better cloud services.

The Inner Mongolia project, located in Ulanqaab city, will use 100 percent renewable energy sources.

The region was listed as one of the country's big data development zones in 2016. Ulanqaab is now home to an ongoing big data center project of Chinese technology giant Huawei Technologies Co Ltd, a big smartphone rival of Apple. The Huawei project is expected to cost 1.5 billion yuan when finished.

James Yan, research director with Counterpoint Technology Market Research, a global research firm, said, "Establishing local data centers would further strengthen Apple's ties with the Chinese government, and help reduce the company's operating and maintenance costs of cloud services."

As for data security, he said the Chinese operator GCBD, with disaster recovery capabilities, already has data privacy and security protection in place.

GCBD's shareholders include Inspur Group Co Ltd, China's largest server-maker.

Apple is ratcheting up investment in China. Last March, the California-based company announced plans to build two research and development centers in Shanghai and Suzhou, Jiangsu province, as part of its broad efforts to tap into the country's manufacturing, design and app development talent pools.