For the first time, AirTags will be produced in Indonesia, with plans for this operation to eventually represent 20% of the company’s global output, based on a recent report.
This initiative is part of Apple’s strategy to fulfill a governmental directive requiring a substantial investment in the local economy to lift an existing ban on iPhone sales within the nation.
Apple’s Compulsory $1 Billion Investment in Indonesia
Governments in populous nations are becoming increasingly strategic in negotiating for Apple’s market access, often demanding significant investments in return.
A notable instance is India, which previously denied Apple the establishment of retail stores until the company committed to substantial local manufacturing.
Initially, Indonesia’s request was relatively modest, asking Apple to invest $109 million in a developer academy and an additional $10 million for manufacturing. However, after these targets were not met, the government intensified its demands by imposing a ban on the iPhone 16, subsequently insisting on a much larger investment.
Apple made a preliminary offer of $100 million, which fell short of the government’s expectations. The demand eventually escalated to a billion-dollar manufacturing commitment, which Apple reportedly agreed to earlier this month, although specific details were not provided.
According to Bloomberg, an agreement has now been finalized, with plans for one of Apple’s suppliers to set up AirTag production facilities in the country, aiming for a gradual increase in output to achieve the 20% production goal.
As reported, one of Apple’s suppliers will establish an AirTag manufacturing facility on Batam Island. This new plant is projected to employ around 1,000 workers and is strategically located about a 45-minute ferry ride from Singapore due to its advantageous free-trade zone status, which waives value-added and luxury taxes alongside import duties. It is anticipated that this plant will ultimately contribute to 20% of the total AirTag production.
President Prabowo Subianto has reportedly approved the arrangement for the $1 billion investment from the renowned US technology giant, as noted by individuals familiar with the negotiations.
Image credit: Jonas Elia on Unsplash
