In a major development, Apple and Indonesia have struck a $1 billion agreement to end the five-month ban on iPhone 16 sales in the Southeast Asian nation. The deal, expected to be formalized this week, marks the resolution of a standoff that began in October 2024 when Indonesia blocked Apple's latest flagship phones over local manufacturing compliance issues.
Under the new agreement, Apple will make substantial investments in Indonesia's tech sector, dramatically increasing its previous offers of $10 million and $100 million that the government had rejected. The deal includes plans for manufacturing facilities, research and development centers, and educational initiatives.
A key component involves establishing an AirTag production plant on Batam island, operated by Apple supplier Luxshare Precision Industry. The facility aims to produce 20% of global AirTag output. Another manufacturing center in Bandung will focus on various Apple accessories.
The tech giant has also committed to training local talent in software development and product design, addressing Indonesia's demand for domestic R&D capabilities. Apple will establish coding academies to develop technical skills among Indonesian students.
The agreement represents a win for Indonesian President Prabowo Subianto, who championed the $1 billion investment package. For Apple, the deal reopens access to Indonesia's market of 278 million people, offering growth potential as Chinese sales slow. However, the company has not committed to manufacturing iPhones locally.
The Ministry of Industry is expected to issue permits allowing iPhone 16 sales to resume shortly. This resolution demonstrates Indonesia's successful strategy in leveraging its large market to secure substantial foreign investment while promoting local manufacturing capabilities.