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A Standoff Since October
Surprisingly, Indonesia is holding its ground! The country banned the sale of the iPhone 16 after Apple failed to meet its investment commitments, which are necessary to avoid import restrictions. Despite increasing its financial offers from 1 to 10 million, to 100 million, and then to 1 billion dollars, Apple’s proposals, including the construction of a plant dedicated to AirTag production, were deemed insufficient by the Indonesian government.
Indonesia requires that smartphones have a local content quota of 35 to 40%, forcing Apple to rethink its production strategy. Until now, the company had no manufacturing facilities in Indonesia, although Tim Cook mentioned this possibility in April 2024.
A Victory for Indonesia?
Rosan Roeslani, Indonesia’s Investment Minister, stated in Davos: I firmly believe this will be resolved very, very soon. Hopefully, we can settle this issue within one or two weeks
. He also mentioned that the main disagreements between Apple and the Indonesian authorities were about how the investment would be distributed. However, both parties now seem close to a compromise.
According to Nikkei Asia, Apple has started discussions with its suppliers about the possibility of local production. If confirmed, this would represent a victory for Indonesia, which has already compelled Huawei to manufacture its smartphones locally—another win for Indonesia.
However, setting up a supply chain and manufacturing facilities that meet local requirements will take time and require massive investments. Apple might condition its commitment on an immediate lifting of the ban on the iPhone 16.
A Market at Stake, Yet Limited Sales
Before the ban, Apple planned to sell 2.9 million iPhones in Indonesia in 2024, which only represents 2% of the smartphone sales in the country. While the market is modest for the company, Indonesia holds significant growth potential, especially given the fierce competition from players like Samsung and Huawei.
The lack of an official announcement from Apple or the Indonesian government keeps the future of iPhone sales in the country uncertain. Nevertheless, these discussions could mark the first step towards a new industrial strategy for Apple in Southeast Asia.