In response to a ban on the iPhone 16 in Indonesia, Apple has ramped up its manufacturing investment in the nation from $10 million to a remarkable $100 million. Update: The Indonesian government is looking for further commitments – see the end of the article.
The Indonesian authorities took a firm stance after Apple did not fully meet its promised investment, indicating the company’s urgency to resolve the situation…
The iPhone 16 Ban
Indonesia has adopted a strategy similar to India’s, which requires Apple to relocate parts of its manufacturing operations to the country in exchange for selling its products freely.
In India, Apple was barred from opening its online and physical stores until it established significant iPhone assembly operations locally. As a result, India has become Apple’s second-largest manufacturing hub after China.
In Indonesia, Apple proposed investing $109 million in developer academies alongside a $10 million manufacturing investment over two years. Although the initial agreement was accepted, the government claimed Apple fell short of the developer funding, contributing only $95 million.
This discrepancy led to the Indonesian government banning the sale of iPhone 16 devices. The sale of Google Pixel phones has also been restricted for comparable reasons.
Apple to Enhance Manufacturing from $10M to $100M
Bloomberg reports that Apple has now proposed to escalate its local manufacturing investments from $10 million to $100 million contingent on the government lifting the ban on iPhone sales.
The new approach indicates that Apple intends to invest close to $100 million in Southeast Asia’s largest economy over the next two years. Apple’s prior plan involved nearly $10 million, aimed at developing a factory for accessories and components in Bandung, situated southeast of Jakarta […].
By committing to this investment, Apple aims to access Indonesia’s market of 278 million consumers, many of whom are tech-savvy and under 44 years old.
The specifics of this investment remain to be clarified. It could involve discussions with Foxconn to establish iPhone and iPad assembly plants in Indonesia or coordinating with other supply chain partners for component production.
Update: The government has previously indicated that the latter option would be acceptable but expressed, through the Antara news agency, that they expect a larger investment than $100 million.
“From the government’s perspective, of course, we want this investment to be larger,” ministry spokesperson Febri Hendri Antoni Arif stated on Thursday.
This is not the first instance where Apple has had to secure investment guarantees to obtain the right to sell iPhones in Indonesia; similar circumstances occurred back in 2017.
Photo of Jakarta by Dias ^ on Unsplash
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