For the first time, AirTags will be produced in Indonesia, and according to a recent report, manufacturing is expected to reach 20% of global output over time.
This initiative is Apple’s strategy to comply with a government mandate requiring a billion-dollar investment in the country’s economy to lift a ban on iPhone sales.
Apple’s mandated $1 billion investment in Indonesia
Increasingly, governments of populous nations are becoming adept at negotiating terms for granting Apple market access, insisting on inward investments in exchange.
For instance, India previously denied Apple permission to open stores until the company established substantial manufacturing within its borders.
Initially, Indonesia asked Apple to invest $109 million in a developer academy and an additional $10 million for manufacturing. However, after these targets were not fully met, the government escalated its demands, including a sales ban on the iPhone 16 and a significantly larger investment requirement.
Apple’s first proposition was $100 million, which the government deemed insufficient. Following this, a demand for a $1 billion manufacturing investment was issued. Reports earlier this month confirmed that Apple had acquiesced to this demand, yet specific details remained unclear.
Bloomberg states that an agreement has been finalized, with Apple working to have one of its suppliers set up production for AirTags in Indonesia, gradually increasing output until one in five AirTags are manufactured locally.
According to insiders, one of Apple’s suppliers will establish a facility for producing AirTags on Batam Island. This facility is anticipated to employ around 1,000 individuals initially, with Batam being selected due to its free-trade zone status, which exempts companies from value-added and luxury taxes, as well as import duties. […]
The plant is expected to contribute to 20% of the global AirTag production.
This manufacturing setup will fulfill a large portion of the required investment, supplemented by additional accessories and further developer academies.
While no official announcement has been made, sources indicate that Indonesia’s president has consented to Apple’s investment proposal.
President Prabowo Subianto has reportedly approved the government’s acceptance of a $1 billion investment from the American tech giant, as per knowledgeable sources.
Photo by Jonas Elia on Unsplash
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