Apple CEO Discusses Potential Manufacturing Plant in Indonesia, Potential for Lower Prices on Apple Products

Apple CEO Discusses Potential Manufacturing Plant in Indonesia, Potential for Lower Prices on Apple Products

Apple CEO Tim Cook met with President Joko Widodo (Jokowi) at the State Palace on Wednesday, April 17, providing the Indonesian government with an opportunity to further promote Apple's investment in the country. During the meeting, Jokowi asked Apple to participate in the assembly of iPhones and MacBooks in Indonesia.

Cook said Apple would consider President Jokowi's request to build an Apple manufacturing facility in Indonesia. He also emphasized that Indonesia is a strategic market for Apple with significant investment potential. Cook expressed confidence in investing in Indonesia despite Apple's decision in 2016 not to build a factory in the country.

Earlier, Industry Minister Agus Gumiwang confirmed that an agreement had been reached to build an Apple factory in Indonesia, starting with the use of local components. He noted that components for HP products manufactured in Indonesia could potentially be used by Apple. Agus also mentioned that Jokowi has invited Apple to participate in the development of a smart city in the National Capital of Indonesia (IKN) in Nusantara.

Read Also: Apple Pumps Billions into Vietnam! Set to Flow into Vietnam's Supplier Network

Cook's visit to Indonesia followed Apple's announcement of its fourth Apple Developer Academy in the country, based in Bali. The program was initially introduced in 2018 to train app developers in Indonesia, starting in Jakarta. Currently, the Apple Developer Academy is also present in Surabaya, Batam, and Tangerang.

Although Apple has no manufacturing facilities in Indonesia, the company has announced an investment of 1.6 trillion rupiah (about $99 million) in the country's app developer ecosystem, according to the AP.

In recent years, the Jokowi administration has worked diligently to attract manufacturing investment to Indonesia as part of an effort to spur economic growth, while Apple has sought to diversify its supply chain away from China, where most of its smartphones and tablets are assembled.

Over the past three years, Apple has intensified its efforts to reduce its reliance on China as a manufacturing hub, especially after the impact of the Covid-19 pandemic. The disruptions caused by Covid affected operations and production at Apple's main iPhone factory in China, operated by its assembly partner Foxconn. Since then, Apple has been looking to expand its manufacturing base beyond China.

Indonesia is poised to follow in the successful footsteps of Vietnam as a major manufacturing hub for Apple outside of China. Apple has also increased its production in India. As a result, Indonesia is striving to become part of the component supply chain for the global technology industry.

Minister of Communications and Information Technology Budi Arie Setiadi mentioned several benefits that would be gained if Apple builds a manufacturing plant in Indonesia. According to Budi, value addition and increased employment opportunities are the most important aspects if this plan materializes. This is expected to lead to a reduction in the prices of Apple products in Indonesia.

Budi also explained that currently only two out of 360 components of Apple products are produced in Indonesia, while Vietnam produces 72 components. Therefore, President Joko Widodo asked Cook to increase the domestic component content of Apple products in Indonesia.

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