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Apple Planning New Server Farm in North Carolina

The Charlotte Observer reports that North Carolina lawmakers are working on special legislation to give Apple, Inc a multi-million dollar tax break in order to entice the company to build an East Coast server farm to the state.

The tax breaks could be worth about $46 million in the next decade, assuming the company reaches its $1 billion investment target within nine years of starting, according to a memo by legislative fiscal staffers that does not identify the company. The memo said no current company meets the criteria to receive the tax break and the Commerce Department knows of just one with the potential to qualify.

Apple is identified as the company in question by a state official with knowledge of the recruitment efforts. The plan would target $1 billion in investments over the next 9 years which could be easily covered by Apple's nearly $29 billion in cash reserves.

While Apple makes the bulk of its income through hardware sales, the company has increasingly been positioning itself as a services company that require large server farms to support. Apple's iTunes service, of course, is likely the most demanding, but Apple has also worked to expand their MobileMe web services over this past year. The MobileMe launch was marred by outages and poor performance during the initial launch demonstrating the importance of the underlying infrastructure.

There have been reports that Apple may further expand their online services in the future with the possibility of web versions of some of their existing applications.