Apple in talks to manufacture iPhones in Indonesia
What's the story
Apple is said to be mulling the production of iPhones in Indonesia after the country imposed a sales ban on its iPhone 16 model. The Indonesian government had imposed the ban in October 2024, owing to Apple's failure to meet its investment commitments. Despite multiple attempts from Apple with direct investment proposals and expansion of development centers, all offers were rejected till now.
Investment issues
Investment shortfall and Indonesia's local content quota
Apple had originally promised to invest about $110 million in Indonesia but only invested $95 million, falling short. This may have marked the end of an agreement period between the two parties. Subsequently, Indonesia imposed a local content quota requirement, asking companies to source 35%-40% of components locally for devices such as smartphones.
Investment proposal
Billion-dollar investment proposal
After the iPhone 16 sales ban, Apple offered a series of investments, starting with $10 million, which fell short of covering its previous deficit. Subsequent $100 million offers were also turned down by Indonesia. Finally, Apple offered a $1 billion investment that Indonesia accepted but was still considered insufficient to lift the ban.
Manufacturing shift
Unresolved iPhone 16 ban
As part of its $1 billion investment, Apple started some manufacturing on Batam island in Indonesia. However, these operations were not related to iPhone components and didn't affect the iPhone 16 ban. Indonesian Investment Minister Rosan Roeslani had said in late January 2025 that they were "within one or two weeks" of resolving this issue, but no official announcement has been made yet.
Manufacturing challenges
Potential manufacturing shift to Indonesia
Setting up manufacturing facilities and a supply chain to fulfill Indonesia's local content quota requirement would be expensive and time-consuming. However, Apple is likely to demand an immediate lift of the iPhone 16 ban as part of its local manufacturing commitment. Before the ban, Apple was expected to sell 2.9 million iPhones in Indonesia in 2024, reaching only about 2% of buyers in the country.