But surely much of that overseas cash is invested and earning enough that 3.25% interest is erased or at least mostly offset?

Doesn't the word "cash" imply that the money is not invested? If they bought factories or something else productive, we'd usually refer to that as "capital".

IIRC the term is typically "cash and equivalents." [1] There is definitely not the expectation that Apple has $200B+ sitting in checking accounts unable to earn any interest.

Treasuries and certain other government securities count as "cash" in most cases.

Edit: Apple reports most of the amount bandied about as their "cash" as being in "long-term marketable securities." [2]. So it's a mix that is definitely not designed to all be instantly convertible to USD with no penalty. I'd guess most other large companies manage their cash similarly.

1 - https://en.wikipedia.org/wiki/Cash_and_cash_equivalents#Comp...

2 - https://www.apple.com/newsroom/pdfs/Q2FY17ConsolidatedFinanc...

The interest is tax-deductible in the US, which further reduces their US tax liability.

Also, as ryonwaggoner points out, they are free to buy e.g. Treasuries with the offshore cash so that the effective interest rate closer to 1% (before the effect of the reduction in tax liability).

Thank you. I was confused.