In response to the ban on the iPhone 16 in Indonesia, Apple has pledged to significantly increase its manufacturing investments in the region.
The Indonesian government took a firm stance after Apple fell short on its investment commitments, prompting the tech giant to seek a resolution quickly.
The iPhone 16 Ban
Following a strategy similar to that of India, Indonesia is demanding that Apple move part of its manufacturing operations to its soil to allow the sale of its products.
In India, Apple was required to establish substantial iPhone assembly operations to gain the right to open both online and physical stores, resulting in India becoming Apple’s second-largest manufacturing hub behind China.
Apple proposed a deal for Indonesia, suggesting an investment of approximately $109 million in developer academies, coupled with a $10 million investment in local manufacturing over a two-year span. This proposal was accepted initially, but the government noted that Apple’s actual developer spending totaled only $95 million, leading to their decision to ban the sale of iPhone 16 models.
Additionally, similar restrictions have been placed on the sale of Google Pixel phones for comparable reasons.
Apple’s Increased Manufacturing Commitment: From $10M to $100M
Bloomberg reports that Apple is now willing to raise its intended manufacturing investment from $10 million to $100 million, contingent upon the government’s lifting of the sales ban on iPhones.
The proposal reflects Apple’s intention to invest nearly $100 million in the largest economy of Southeast Asia over the next two years, according to sources requesting anonymity due to the sensitivity of the information. The earlier plan involved a modest $10 million investment focused on establishing a factory for accessories and components in Bandung, southeast of Jakarta.
By committing to invest in Indonesia, Apple aims to gain uninterrupted access to the nation’s 278 million consumers, a majority of whom are technologically adept and under the age of 44.
Details about the nature of this investment remain unclear. It could involve collaborations with Foxconn to set up iPhone and iPad assembly facilities or coordinating with other supply chain partners to produce components for Apple devices. The government has previously indicated that the latter approach would be acceptable.
This isn’t Apple’s first encounter with mandated investments to secure permission to market its iPhones in Indonesia; a similar situation arose in 2017.
Photo of Jakarta by Dias ^ on Unsplash
FTC: We use income earning auto affiliate links. More.
