Apple Inc will build a US$1.375 billion data center in Waukee, Iowa, Apple and state officials said on Thursday, with US$207.8 million in incentives approved by the Iowa Economic Development Authority and Waukee city council.

Apple will purchase 2,000 acres (8.09 square km) of land in Waukee, about 20 miles (32 km) west of Des Moines, to build two data centers. The company will receive a US$19.65 million investment tax credit for creating 50 jobs.

Apple said the project will generate more than 550 jobs in construction and operations, but did not specify how many of those jobs would be long-term positions.

Speaking alongside Iowa Governor Kim Reynolds, Apple Chief Executive Tim Cook said the facility "will create hundreds of jobs for people in Iowa from construction to engineering."

Cook said Apple will contribute up to US$100 million toward a "public improvement fund" for the city of Waukee, adding the first project supported by the fund will be a youth sports complex that "will be open to all."

The bulk of the subsidy is a planned US$188.2 million property tax abatement of 71 per cent over 20 years provided by the city of Waukee, according to economic development officials.

State subsidies to technology employers have become a key issue in Midwestern states such as Wisconsin, where Foxconn, formally known as Hon Hai Precision Industry Co Ltd, is seeking US$3 billion in subsidies for a US$10 billion LCD panel plant. The incentive package passed Wisconsin's Republican-controlled state Assembly last week by a 59-30 margin.

Foxconn is a major Apple supplier, but is not expected to make any Apple products at its proposed U.S. plant.

The Iowa data center will join Apple facilities in California, Nevada, Oregon and North Carolina, which also host services such as iCloud, Apple Music and the App Store.

"This new data center will play a very important role in the App Store's continued success," Cook said. "As the App Store grows, we look forward to growing in Iowa."

Facebook Inc, Alphabet Inc's Google and Microsoft Corp also maintain data centers in Iowa.

Apple will spend US$110 million to acquire and prepare the land for its data centers in Iowa, according to economic development officials.

The bulk of the costs, US$620 million, will go toward construction. Apple will spend US$600 million on computer equipment, with US$45 million going toward other equipment.