Indonesia says Apple's $1 billion investment isn't enough to lift iPhone 16 ban

AppleInsider

The Indonesian government says it will not lift its ban on sales of the iPhone 16 despite Apple committing to $1 billion in manufacturing within the country.

Jakarta - Image credit: Tom Fisk/Pexels

Indonesia has long operated what's called a local content mandate, meaning that devices sold there had to have 35%-40% of their components sourced within the country. For years, though, companies including Apple could seemingly get around that high bar by instead investing in development and jobs in the country, but not any more.

Following reports of a meeting between government officials and Apple executives, Reuters says that Minister Agus Gumiwang Kartasasmita has now confirmed reports that Apple has made a deal to invest $1 billion in a new facility.

The factory will be built on Batam, part of the Riau Islands near Singapore. Reportedly, it will open in 2026 and be used to manufacture AirTags -- and Indonesia says that doesn't count.

"There is no basis for the ministry to issue a local content certification as a way for Apple to have the permission to sell iPhone 16," said Minister Agus Gumiwang Kartasasmita, "because [the factory] has no direct relations [to iPhone components]."

Agus told reporters that he had held two days of meetings with Nick Ammann, Apple's vice president of global government affairs, who offered "innovative investment" proposals.

Prior to 2024's ban, Apple had been allowed a local content mandate chiefly because of its investment in creating local developer academies. Apple's commitment at the time was for around $110 million, and the company fell short of that by about $10 million.

It's not clear if Apple would have been able to continue selling the iPhone 16 if it had not failed to meet its commitments. But it appears that Indonesia has decided to make its local content mandate inviolate.

Sources vary on whether that mandate requires 35% or 40% of components to be locally sourced, but either way it's difficult for any manufacturer to meet that target, although Huawei plans to shortly. Apple currently has no manufacturing facilities in Indonesia, although Tim Cook did promise to consider changing that.



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beowulfschmidt

Can you say "shakedown"?

jimh2

I side t the new President will get this rectified. 

DAalseth

There is a point where negotiation becomes extortion. What’s next? Where are they going to move the bar to if Apple agrees to this?

kherberos

"But it appears that Indonesia has decided to make its local content mandate inviolate." 

"Inviolate" ... well until you know how to "talk" to the right person ... 

Afarstar

Tell the Indonesian Govt. to Foxtrot Oscar as we say in the UK. That might make a few other Asian countries sit up and take note. 

anonymouse

Thanks EU for showing the world how to shake down American tech companies.

godofbiscuitssf

beowulfschmidt said:

Can you say "shakedown"?

It's called dealing.

ramanpfaff

Time for Apple to look elsewhere. Let the black market smuggle in iPhones for anyone that really wants one.

bloggerblog

A shakedown is more of what the Irish government and the ECJ did to Apple which is to lure them with a 0.005% tax rate then turn around and say Oh that should've not been allowed and you now owe us $14B in taxes and interest! Indonesia is just negotiating a deal after Apple has dropped the ball. If Apple doesn't like it they can simply not do anything and not sell in Indonesia, unlike Ireland and the ECJ.

mikethemartian

anonymouse said:

Thanks EU for showing the world how to shake down American tech companies.

https://www.businessinsider.com/apple-tim-cook-275-billion-china-deal-regulatory-crackdown-report-2021-12

launfall

launfall Perhaps a tariff on all goods imported from Indonesian equivalent to Apple's investment will change their mind. I would also suggest such a tariff on all good imported from EU countries should they continue their planned punitive actions against Apple equalling a 10% tax on Apple's global sales. Hit them where it hurts the most then sit back and listen to the screaming from their manufacturers.

get serious

Tarriffs - nothing like taxing your own citizens to punish another country. 
Besides where would American capitalists invest in cheap labor with few environmental responsibilities if not for Indonesia. I mean it's not like we can make Billy Bass here in the US.

StrangeDays

launfall said:

launfall Perhaps a tariff on all goods imported from Indonesian equivalent to Apple's investment will change their mind. I would also suggest such a tariff on all good imported from EU countries should they continue their planned punitive actions against Apple equalling a 10% tax on Apple's global sales. Hit them where it hurts the most then sit back and listen to the screaming from their manufacturers.

No, because tariffs are stupid. Despite what you may have heard, the foreign entity does not pay tariffs, domestic importers (US companies) do, and then roll that cost into a higher priced good so the consumer pays it. 

9secondkox2

Apple should have never invested hundreds of billions in China. Now everyone will want the same treatment. 

nubus

jimh2 said:

I side t the new President will get this rectified. 

Trump got 1 million. No jobs in red states. No "Designed in the US". It remains "Designed in California". Pretty bad deal.

Indonesia got 1 billion from Apple and declined.

Apple invested 256 billion in China - research, collaboration, promised to buy Chinese parts,... clearly the better deal.

The policies of Trump have forced Apple to move production to India and Indonesia at pace. He decided to leave Afghanistan to Taliban (the final hours weren't pretty but the decision and timing were made by Trump). Will he give Ukraine to Putin? In that case TSMC and Taiwan are ready to take for China. Without Taiwan then Apple, Qualcomm, Nvidia, AMD, Intel, Amazon/AWS... all those huge US companies will depend on China for their core tech. There is no knowledge or manufacturing capability in the US for doing this at scale. All the AI tech and powerful processors produced by TSMC will then be produced by China. The knowledge gap that currently benefits US defense will be reversed.

I'm sure Apple will invest more in Indonesia. It makes sense and Apple is in no position to make a better deal.

beowulfschmidt

godofbiscuitssf said:

beowulfschmidt said:

Can you say "shakedown"?

It's called dealing.

It's called "dealing" in bad faith.