Apple strikes deal with Indonesia, secures future market access for iPhones

A new agreement between Apple Inc. and Indonesia will allow the tech giant to sell the iPhone16 in the country, a senior government official said, resolving a dispute over investment requirements that led Jakarta to ban the model. 

The deal commits Apple to hundreds of millions of dollars in new investments, said Indonesian Minister of Industry Agus Gumiwang Kartasasmita. 

Those include the establishment of a research and development center, integration of Indonesian suppliers into its global manufacturing network, and expansion of education and technology programs. 

The agreement allows Apple to regain compliance with Indonesia’s Domestic Component Level (TKDN) certification, a rule mandating that foreign tech companies invest in the country in exchange for market access.

“The talks were challenging until the very last 15 minutes,” Agus told reporters in Jakarta on Wednesday. “But the memorandum of understanding has now been signed electronically on a provisional basis.”

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For Apple, the agreement represents a win in Southeast Asia’s largest country, where smartphone penetration is rapidly increasing. The iPhone 16 is expected to hit Indonesian stores soon after Apple secures the necessary certification and distribution permits from the government. 

“Sales could begin as early as next month,” Agus said, though he declined to provide a specific date.

The 2017 regulation requires that 40% of smartphones sold in Indonesia use domestically sourced components. The policy is part of Indonesia’s push to boost domestic manufacturing and reduce reliance on imports.

The dispute escalated in late 2024, when Apple failed to meet its previous investment commitments under the regulation, prompting Indonesian regulators to block sales of the iPhone 16.

Unlike rivals such as Samsung and Oppo, which have built local assembly plants, Apple had chosen to fulfill its obligations through innovation investments, a strategy that fell short of government expectations.

With iPhone sales halted, Apple entered negotiations with the Ministry of Industry, culminating in this agreement, which the government said was a fresh investment cycle rather than a continuation of past obligations.

Under the new deal, Apple has pledged U.S. $160 million in hard cash investments and will deepen its supply-chain presence in Indonesia, the industry ministry said in a statement. 

The company will bring in Luxshare, a key supplier in its global supply network, to invest $150 million in a new manufacturing facility in Batam, an industrial hub near Singapore. 

The plant will produce AirTag accessories, with Indonesia set to become the supplier for 65% of the global AirTag market. An AirTag is a tracking device that when attached to a user’s belongings, such as keys, helps the user find the item.   

Apple has also agreed to source AirTag batteries from Indonesian manufacturers, further embedding local suppliers into its ecosystem, the industry ministry said.

Additionally, Apple is expanding production in Bandung, where local company Long Harmony will manufacture mesh fabric for AirPods Max, making it an official part of the company’s global supply network.

These investments represent a change in Apple’s approach to meeting Indonesia’s local content requirements, moving beyond software and education programs to deeper supply chain involvement.

One of the most significant commitments in the agreement is Apple’s decision to establish a research and development center in Indonesia, focused on software innovation, the ministry said. 

It will be Apple’s first research and development center in Asia and only the second outside the United States, after Brazil.

The facility will partner with 15 leading Indonesian universities, including Bandung Institute of Technology and University of Indonesia, and will also be part of the Indonesia Chip Design Collaborative Center (ICDEC), an initiative aimed at strengthening Indonesia’s presence in the semiconductor and chip design industry, it said.