Apple has responded to an iPhone 16 ban in Indonesia by offering a ten-fold boost to its manufacturing investments in the country – from $10M to $100M. Update: The Indonesian government has said that it expects more – see the end of the piece.
The Indonesian government responded aggressively when Cupertino company fell a little way short of its promised spend in the country, and Apple seems extremely keen to resolve the matter …
The iPhone 16 ban
Indonesia has followed the playbook successfully implemented by India: demanding that Apple bring some of its manufacturing business to the country in order to be allowed to freely sell its products there.
In India’s case, Apple was not allowed to open online and physical retail stores in the country until it established significant iPhone assembly operations there. Partly in response to this, India is now Apple’s second-largest manufacturing center after China.
In Indonesia, Apple offered a compromise, in which it would invest the equivalent of $109M in developer academies in the country, while also investing $10M in manufacturing over the next two years. This was accepted, but the government said that Apple failed to hit the developer spend, instead investing only $95M.
The government responded by imposing a ban on the sale of iPhone 16 models in the country. The government has also banned the sale of Google Pixel phones in the country for the same reason.
Apple to boost manufacturing from $10M to $100M
Bloomberg reports that Apple has now offered to increase its planned investment in local manufacturing from $10M to $100M if the government lifts the iPhone sales ban.
The proposal would see Cupertino-based Apple invest almost $100 million in Southeast Asia’s largest economy over two years, the people said, asking not to be identified because they’re not authorized to speak publicly. Apple’s previous investment plan of close to $10 million would have involved the company investing in a factory making accessories and components in the city of Bandung, located southeast of Jakarta […]
By offering to invest in the country, Apple is seeking to get unfettered access to Indonesia’s 278 million consumers, more than half of which are under the age of 44 and tech savvy.
It’s as yet unclear what form this investment might take. It could involve asking Foxconn to establish iPhone and iPad assembly plants in the country, or arranging for other supply chain partners to manufacture components for Apple devices.
Update: The government has previously indicated that the latter approach would be acceptable, but said though the Antara news agency that it expected more than $100M.
“From the government’s perspective, of course, we want this investment to be larger,” ministry spokesperson Febri Hendri Antoni Arif said on Thursday.
It’s not the first time that Apple has had to guarantee investments in the country in order to secure the right to sell iPhones there: the same thing occurred back in 2017.
Jakarta photo by Dias ^ on Unsplash
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