AirTags will be made in Indonesia for the first time, and production will ramp up to 20% of global production over time, according to a new report.
The plan is Apple’s way to meet a government requirement for a billion dollar investment in the economy in order to reverse a ban on the sale of iPhones in the country …
Apple’s forced $1B investment in Indonesia
The governments of populous countries are getting increasingly savvy about seeking a quid pro quo for giving Apple access to their markets, demanding inward investment in return.
For example, India famously refused permission for Apple stores in the country until the iPhone maker set up large-scale manufacturing within the country.
Indonesia started out with a more modest demand for Apple to invest $109M in a developer academy there, with a further $10M manufacturing spend. However, when this target wasn’t quite hit, the government upped the ante dramatically. It banned the iPhone 16 from sale, and demanded a far larger investment.
Apple initially offered $100M, but the government said that wasn’t enough. It then said it wanted a billion dollar manufacturing spend in the country. We heard earlier this month that Apple had agreed to this, though we didn’t have any specifics.
One in five AirTags to be made in Indonesia
Bloomberg reports that an agreement has been reached, and that Apple is arranging for one of its suppliers to manufacture AirTags in the country – and to gradually ramp up production until one in five AirTags are made there.
One of Apple’s suppliers will set up a plant producing AirTags on the island of Batam, the people said. The plant is expected to employ around 1,000 workers initially and Apple has chosen Batam, about a 45-minute ferry ride from Singapore, because of its free-trade zone status, which exempts companies from value-added and luxury taxes, as well as import duties, the people said […]
The plant will eventually account for 20% of global production of AirTags.
That will account for the bulk of the required investment, while other accessories and more developer academies will make up the balance.
While nothing has been publically announced, Indonesia’s president is said to have accepted Apple’s offer.
President Prabowo Subianto gave his approval for the government to accept a $1 billion investment from the US tech giant, according to people familiar with the matter.
Photo by Jonas Elia on Unsplash
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