Apple and Indonesia Reach Deal to End iPhone 16 Ban

Apple and Indonesia have agreed on terms to lift the country's five-month ban on iPhone 16 sales, according to people familiar with the matter who spoke to Bloomberg. The deal concludes a battle that began in October, when Indonesia refused to issue permits for Apple's flagship iPhone lineup over Apple's failure to comply with domestic manufacturing requirements.

Under the agreement, Apple will invest $1 billion in Indonesia, a significant increase from its previous commitments of $10 million and $100 million that were rejected by the government. The deal is expected to be formalized through a memorandum of agreement to be signed as early as this week, with the Ministry for Industry issuing permits allowing iPhone 16 sales 'as soon as possible.'

Beyond the monetary investment, Apple has reportedly committed to training local talent in research and development, so that Indonesians can develop software and design their own products. The pledge addresses one of the government's key demands for Apple to establish R&D facilities in the country.

The agreement also includes plans for a manufacturing plant on Batam island that will produce AirTags, Apple's device tracking accessories. This facility will be operated by Apple supplier Luxshare Precision Industry, and is expected to eventually account for 20% of global AirTag production.

Another manufacturing facility is planned for Bandung, about three hours from Jakarta, which will produce other types of accessories. Part of the investment will also fund Apple academies to equip Indonesian students with tech skills like coding.

Despite the substantial concessions, Bloomberg's sources indicated that Apple has no immediate plans to manufacture iPhones in Indonesia.

The deal is a victory for Indonesian President Prabowo Subianto, who directed his ministers to accept Apple's $1 billion investment offer. However, the Ministry of Industry unexpectedly upheld the ban last month while seeking better terms, which have apparently now been agreed.

Indonesia's hardball approach seems to have paid off, securing significant investment from a major foreign company and supporting the government's goal of boosting local manufacturing rather than simply using the nation as a sales market.

For Apple, regaining access to Indonesia's market of 278 million people — over half of whom are under 44 and tech-savvy — comes at a crucial time as its sales in China have slowed. Apple may not be among the top five smartphone brands in Indonesia, but the market offers the company a lucrative growth opportunity.Related Roundups: iPhone 16, iPhone 16 ProTag: IndonesiaBuyer's Guide: iPhone 16 (Neutral), iPhone 16 Pro (Neutral)This article, "Apple and Indonesia Reach Deal to End iPhone 16 Ban" first appeared on MacRumors.comDiscuss this article in our forums