Indonesia Wins, Apple Considers IPhone Production In Indonesia

The Minister of Industry of the Republic of Indonesia, Agus Gumiwang Kartasasmita (photo; dock. between)

Four months after Indonesia banned sales of the iPhone 16 and demanded an increase in investment from Apple, the US company is reportedly in discussions with its suppliers to produce iPhones locally in Indonesia.

Indonesia banned the sale of the iPhone 16 in October 2024, shortly after the device was launched. This decision was taken because Apple failed to fulfill its commitment to invest in Indonesia, which previously granted them exemption from strict import requirements.

Apple has offered direct investments and more development centers in Indonesia, but the government rejected the offer. Now, according to a Nikkei Asia report, Apple is in talks with its suppliers to consider domestic iPhone production.

If true, this step is a big victory for Indonesia, especially after Huawei is also rumored to be producing smartphones in the country.

Previously, Apple promised to invest around 110 million US dollars (Rp1.8 trillion) in Indonesia, but only realized $95 million (Rp1.5 trillion). This is suspected to be one of the reasons the government enforces the "local content quota" rule, which requires devices such as smartphones to have 35%-40% of components sourced from within the country.

In April 2024, Apple CEO Tim Cook stated that he would consider local production, but until October 2024 there had been no significant development. The government has finally imposed a ban on the sale of the iPhone 16.

Since then, Apple has repeatedly made an even larger investment offer. Starting from an additional 10 million US dollars (Rp163 billion) which was considered too small later increased to 100 million US dollars (Rp1.6 trillion), and finally Apple offered an investment of US$1 billion (Rp16.3 trillion). This offer was accepted by the Indonesian government, but still considered insufficient to lift the iPhone 16 ban.

As part of the investment, Apple moved some production to Batam Island, but only for AirTag devices. The Minister of Industry, Agus Gumiwang Kartasasmita, stated that this did not affect the ban on the iPhone 16 because the factory was not directly related to the iPhone component.

At the end of January 2025, the Minister of Investment, Rosan Roeslani, said that Indonesia was in the final stages of resolving the problem of banning the iPhone 16 and would make a decision in a week or two. However, until now there has been no official announcement from the government or Apple.

Building a production facility and supply chain to meet the 35%-40% quota of local content will be a big challenge for Apple, both in terms of cost and time. However, it seems that Apple will make lifting the iPhone 16 ban the main requirement before committing to local production.

Before the ban is enforced, Apple is predicted to sell around 2.9 million iPhones in Indonesia by 2024, covering only about 2% of the country's total smartphone buyers. If Apple actually started production in Indonesia, this could open up even greater opportunities for the company to increase its market share