Apple's $100 Million Gamble, Tech Giant Moves to Lift Indonesia's iPhone Ban

Apple Inc AAPL is stepping up its efforts to address a sales ban on its iPhone 16 in Indonesia by proposing a substantial $100 million investment.

The tech giant aims to strengthen its position in one of Southeast Asia’s largest markets by meeting the country’s stringent domestic content requirements.

Earlier this year, Apple failed to meet Indonesia’s Domestic Content Level threshold, a prerequisite for certifying imported products like the iPhone 16, Firstpost reports.

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Apple initially offered $10 million to address the shortfall, but the Ministry of Industry deemed this insufficient, resulting in the ban’s continuation.

Indonesia’s Ministry of Industry blocked iPhone 16 sales last month, citing the company’s failure to meet a 40% domestic content threshold, Bloomberg reports.

Apple’s previous $10 million investment plan focused on manufacturing accessories and components but fell short of regulatory demands.

Apple has invested $95 million in Indonesia through developer academies but remains $5 million short of the 1.7 trillion rupiah ($109.6 million) threshold.

Apple proposed a $100 million investment spread over two years to resolve the impasse. However, Indonesian authorities are pushing for these funds to focus on research and development rather than bolstering existing manufacturing collaborations.

Apple has already invested in initiatives like its Developer Academies, with the latest launch in April 2024. Despite these efforts, the Ministry remains steadfast in its demand for a more strategic commitment.

Indonesia’s stringent investment requirements reflect a broader policy under President Prabowo Subianto aimed at boosting local industry and reducing reliance on imports. Global tech companies, including Alphabet Inc GOOG GOOGL Google, and ByteDance, have faced similar challenges.

Apple’s increased investment underscores its determination to tap into Indonesia’s 278 million consumers, over half of whom are under 44 and tech-savvy, the report says.

The ban’s resolution could also bolster Apple’s efforts to decouple its supply chain from China while strengthening its foothold in emerging markets.

Meanwhile, Apple analyst Ming-Chi Kuo reported a ten million-unit cut in iPhone 16 orders from late 2024 through mid-2025. Most cuts impact non-Pro models, with production now forecast at 84 million units.

iPhone SE4 production is set to begin in December, targeting 8.6 million units by Q1 2025. Kuo expects iPhone revenues to face pressure in early 2025 due to shipment declines and a less favorable product mix.

Needham’s Laura Martin expects iPhone sales to account for 89%-96% of Apple’s 2025 revenue.

Price Action: AAPL stock is up 0.64% at $229.48 at the last check on Tuesday.

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