Apple Relents: iPhones May Soon Be Made in Indonesia
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Apple has been having a tough time with the iPhone 16 in Indonesia. It’s not that sales of Apple’s latest iPhone are merely down — they’re non-existent due to a government ban that prevents the company from selling them in the country at all.
The ban is the result of a government policy that requires any company selling products to source 40% of their components from suppliers within the country’s borders. It’s unclear when that specific rule came into effect, but Apple has previously complied with Indonesian requirements by making large investments to build developer academies within the country. In early November, it pledged another $10 million to create a second academy in Jakarta and a new one in Bali.
Sadly, that’s no longer enough for government officials, who have insisted that Apple dig deeper. So, Apple upped its bid to $100 million, promising to build even more developer academies, a new research and development facility, and a manufacturing plant for ear cup meshes for the AirPods Max.
When that still didn’t satisfy regulators, Apple committed to a $1 billion investment, including a plant on the island of Batam to manufacture AirTags.
Indonesia’s President, Prabowo Subianto, endorsed the proposal, but Industry Minister Agus Gumiwang Kartasasmita stopped the deal in its tracks, insisting that it wasn’t fair and equitable because AirTags and AirPods aren’t iPhones. Kartasasmita insists that if Apple wants to sell the iPhone 16 in his country, it must also produce 40% of the components for the iPhone there. AirTags aren’t a “locally made iPhone part,” so they don’t meet the government’s requirements.
With the Indonesian government playing hardball, Apple had to go back and crunch a few more numbers to determine the best way to appease regulators there. Apple can’t afford to simply walk away from Indonesia, not when it has 278 million people and 354 million active mobile phones — the vast majority of which are not iPhones.
In late January, hopes were raised that the ban could soon be lifted when Indonesia’s investment minister, Rosan Roeslani, said in an interview on Bloomberg Television that he believed the issue could be resolved “within one or two weeks.” As investment minister, much of this isn’t in Roeslani’s hands — it seems to rest with the Kartasasmita’s Industry Ministry. The minister suggested that it was a matter of how officials calculated local content requirements.
However, there may be another card in play here. A new report from Nikkei Asia claims that Apple is exploring ramping up an iPhone plant in Indonesia.
“An iPhone assembler has set up a subsidiary in Batam, particularly for Apple and has started hiring engineers as part of the preparation,” said one of the trade publication’s four sources who have heard of the plans independently from each other.
The group says that Apple has been speaking with several of its suppliers about setting up the final assembly of the iPhone in Indonesia. However, a final decision would still be subject to the approval of the Indonesian government, not just for determining whether to lift the ban, but even if Apple will be permitted to operate a plant there.
The government seems unlikely to say no to such a proposal, considering that the iPhone supply chain is highly sought after among Asian consumer electronics companies. It would give the country a feather in its cap while substantially boosting employment in the region.
It’s a big commitment on Apple’s part, as its supply chains don’t turn on a dime. However, it could be worth it — if it satisfies government requirements. It’s unclear if mere “final assembly” in Indonesia would meet the 40% threshold if the components all came from outside the country.
[The information provided in this article has NOT been confirmed by Apple and may be speculation. Provided details may not be factual. Take all rumors, tech or otherwise, with a grain of salt.]
