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Apple Considering Opening a Factory in Indonesia, CEO Says

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Apple Considering Opening a Factory in Indonesia, CEO Says

Tim Cook said that the giant tech firm would “look at” options in Indonesia, as it continues to reduce its heavy reliance on Chinese supply chains.

Apple Considering Opening a Factory in Indonesia, CEO Says

Apple CEO Tim Cook speaks with Indonesian content creators in Jakarta, Indonesia, April 17, 2024.

Credit: X/Tim Cook

Could Apple soon open a factory in Indonesia? It’s certainly something the firm will “look at,” the firm’s CEO Tim Book said yesterday after meeting President Joko “Jokowi” Widodo yesterday at the presidential palace in Jakarta.

“We talked about the president’s desire to see manufacturing in the country, and it’s something that we will look at,” Cook told reporters after the meeting. “I think the investment ability in Indonesia is endless. I think that there is a lot of great places to invest, and we’re investing.”

He added, “We believe in the country.”

After the meeting with Jokowi, Cook also met Indonesia’s president-elect Prabowo Subianto, who is set to take office in October.

Under Jokowi, Indonesia’s government has worked hard to make itself attractive to foreign manufacturers, especially those that hold out the promise of skills transfers or raising the country’s technological wherewithal. At the same time, Apple has been seeking to reduce its heavy supply chain reliance on China, where it still manufactures most of the hardware (phones, tablets, etc.) that forms a major part of its multibillion-dollar revenue stream.

Apple currently has no manufacturing facilities in Indonesia, but the company says it has invested nearly $100 million in its app developer ecosystem in the country, according to The Associated Press. Cook’s visit to Indonesia came after Apple announced that it would open a fourth Apple Developer Academy in the country to be located in Bali. There are currently academies in Surabaya and Batam, and in Tangerang, on the western outskirts of Jakarta.

Indonesia’s industry minister, Agus Gumiwang Kartasasmita, who also attended the meeting between Jokowi and Cook, told the press that by investing in its local developer academies, the company had met the government’s 35 percent local content requirement to sell its products in Indonesia. This obliges companies to derive that proportion of the inputs to their product from domestic firms, in order to promote the development of local industries.

Agus said that this percentage could be pushed higher if Apple built a manufacturing facility in the country. “We will discuss how Apple’s facility in Indonesia could become a global supply chain,” he said, according to a Reuters report. Failing that, he added, it could partner with Indonesian companies to obtain components.

An Indonesian manufacturing facility would make sense for Apple. Given the slowing Chinese economy, the economic risks posed by U.S.-China competition, and Beijing’s ongoing efforts to promote domestic tech firms, the company has started to hedge its bets by looking for alternative manufacturing sites. So far, it has established factories in India and Vietnam.

As it turns out, Cook flew to Indonesia after a two-day visit to Vietnam, where he hinted at increases in investment in the country. “There is no place like Vietnam, a vibrant and beautiful country,” Cook said in a statement, adding that the company’s annual spending in the country had doubled since 2019.

According to the AP, Apple had 26 suppliers with 28 factories in Vietnam, as of 2022, and the firm now manufactures some of its key products there, including AirPods and Apple Watches. Most of these facilities are located in the country’s north, where they are tightly integrated with existing supply chains across the border in southern China.