Apple May Start Producing AirTags in Indonesia to Lift iPhone 16 Ban
Credit: Apple Tomorrow / Twitter
Toggle Dark Mode
Apple is reportedly getting close to a deal with the Indonesian government that could see an ongoing ban on iPhone 16 sales lifted in exchange for a $1 billion investment in the country.
Indonesia has a long-standing policy that requires foreign manufacturers to make substantive investments in the country’s economy if they want to sell their devices there — and Apple hasn’t been meeting its part, according to government officials.
The iPhone 16 has been banned from sale in the country since October after officials determined that Apple had failed to meet the requirement that 40% of the parts in those smartphones be made inside Indonesia’s borders.
Apple offered a $10 million investment in early November, which the government quickly rejected, forcing the iPhone maker to up the ante to $100 million. However, that still didn’t cut it, as Indonesia’s Ministry of Industry said the proposal wasn’t even close to what Apple has invested in other countries and what Apple’s rivals have already been pouring into Indonesia.
With over 354 million active mobile phones in Indonesia, a large portion of which are undoubtedly iPhones, officials felt Apple could dig deeper into the large profits it makes from selling its products in the country. Apple reportedly did precisely that in early December, increasing its bid to $1 billion, according to comments made by Indonesia’s Investment Minister.
Apple presently has no manufacturing facilities in Indonesia. However, it has met past investment requirements by setting up developer academies to encourage app development in the country. Since 2018, it has built three of those in Jakarta, Surabaya, and Batam. As part of the $100 million proposal, Apple had promised to build two more: a second academy in Jakarta and a new one in Bali, plus a new research and development facility and a manufacturing plant for ear cup mesh components for the AirPods Max.
That was all part of the $100 million plan, so Apple will need to do much more to account for another $900 million investment in Indonesia. It looks like part of the plan is to begin mass-producing AirTags there.
Sources speaking with Bloomberg report that President Prabowo Subianto has greenlit Apple’s $1 billion investment. While the Coordinating Ministry of Economic Affairs still has to work out the details and close the deal, Prabowo’s approval is a significant step forward.
In a written proposal to the Indonesian government, Apple has promised to have one of its suppliers set up a plant producing AirTags on the island of Batam, about a 45-minute ferry ride from Singapore. The facility, which enjoys free-trade zone status, would employ around 1,000 workers and account for 20% of the global production of AirTags.
It’s unclear how much of the $1 billion that plant would account for, but Apple has also promised to set up a plant in Bandung, about three hours southeast of Jakarta, to make “other types of accessories.” New Apple academies remain on the table, although it’s unclear if Apple has expanded its plans to create more than the two initially proposed.
With so many details still being worked out, there’s no timeline for when the iPhone 16 will be permitted to go back on sale, nor is there any guarantee that this will happen. The Indonesian government has been known to backpedal on decisions like this in the past, so nothing is certain until the ink is dry on the deal.
