AAPL Apple Inc

By Tripp Mickle 

Apple Inc. said it plans to open two more research-and-development centers in China, beefing up the technology giant's operations in a critical market where it has faced a series of challenges recently.

Apple said the new centers, to be set up in Shanghai and Suzhou, bring its total commitment to R&D facilities in China to more than 3.5 billion yuan, or about $500 million. Last year Apple committed to opening a similar center in Shenzhen, and currently operates one in Beijing.

The announcement -- which Apple issued only in Chinese -- comes as Chief Executive Tim Cook is slated to speak on innovation and corporate social responsibility at the China Development Forum, an annual gathering of Chinese officials and global executives that begins Saturday.

Apple is grappling with rising pressure from homegrown rivals and a string of other setbacks in the world's largest smartphone market. Its sales in Greater China fell 17% in its latest fiscal year to $48.49 billion, as Huawei Technologies Co. and other Chinese companies gained share against its iPhone -- although Apple said sales stabilized in the most recent quarter.

Apple last year also was forced to shut down its online music and book services in China because they violated local media rules. The company also faced criticism from local consumer groups last year over complaints that iPhones were spontaneously shutting down even as half the devices' battery life remained. Apple said a limited number of phones were affected and offered free replacement batteries for those devices.

China is a critical manufacturing hub for Apple, with the vast majority of its products sold world-wide made by contract manufacturers such as Foxconn Technology Group. The company says it has created and supported 4.8 million jobs in China.

China's government increasingly is focused on developing more advanced industries with higher-paying jobs than electronics assembly. Opening R&D centers there, beyond any operational benefits, has long been a way for foreign companies to show commitment to that goal, and try to mitigate Beijing's concerns about Chinese dependence on expensive foreign technologies.

Apple said the new R&D centers will work with Asian companies to develop advanced technology and services. It plans to hire graduates from Chinese universities such as Peking University, Tsinghua University and Shanghai Jiaotong University.

Write to Tripp Mickle at Tripp.Mickle@wsj.com

(END) Dow Jones Newswires

March 17, 2017 10:24 ET (14:24 GMT)

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