Apple Considers Investment in Manufacturing Facility in Indonesia

Apple is exploring the possibility of making investment in a manufacturing facility in Indonesia, according to CEO Tim Cook.
Apple CEO Tim Cook @ WWDC 2023The size of the smartphone market in Indonesia is 34.6 million units in 2023, according to IDC. In 2023, the Indonesian smartphone market witnessed a notable trend: Higher-priced smartphone segment (>US$600) was the only one to grow in 2023, with a 78 percent growth, dominated by Apple and Samsung.

In 2023, Indonesia’s 5G smartphone market grew 31.5 percent, capturing a 17.1 percent share, led by Samsung. The limited availability of 5G networks across Indonesia, due to infrastructure constraints and high operational costs, poses a significant barrier to faster adoption of 5G smartphones.

This scarcity of 5G networks in Indonesia may deter potential consumers from investing in higher-priced 5G smartphones, considering the lack of tangible benefits when access to and utilization of the network remains limited, IDC said.

Tim Cook made the announcement on Wednesday after meeting with Indonesia President Joko Widodo. Tim Cook’s visit to Jakarta follows a prior trip to Vietnam, emphasizing Apple’s engagement with Southeast Asian markets, Reuters news report said.

“We talked about the president’s desire to see manufacturing in the country, and it is something that we will look at,” stated Tim Cook during a press briefing following the meeting.

Apple currently lacks manufacturing facilities in Indonesia. Apple has been investing in app developer academies since 2018. The cost of these initiatives, including the newly inaugurated academy in Bali, amounts to 1.6 trillion rupiah ($99 million).

Indonesia’s Industry Minister, Agus Gumiwang Kartasasmita, who also participated in the meeting, expressed optimism about the potential for Apple’s manufacturing presence in the country to facilitate global exports. He highlighted the government’s willingness to collaborate with Apple on establishing a robust supply chain, either through direct manufacturing or partnerships with local firms for component sourcing.

While Apple has met Indonesia’s 35 percent local content requirement for product sales through its investments in developer academies, the government seeks to further increase local content through the establishment of a manufacturing facility.

Apple’s decision to consider manufacturing in Indonesia aligns with its manufacturing operations in Vietnam, particularly for products such as iPads, AirPods, and Apple Watches. Additionally, suppliers for MacBooks have been investing in Vietnam, reflecting Apple’s strategic diversification of manufacturing locations.

Baburajan Kizhakedath