R&D Within the Smartphone Industry
Reuters reported Apple’s commitment to invest roughly $44 million in a research and development center in Indonesia. The investment will allow Apple to begin selling the iPhone 7 as the government has stipulated 30 percent of handsets sold within the country must be made of local content which includes hardware, software or investment commitment.
Apple’s local content certification received in November allows the company to begin selling the iPhone 7 as of January 2017. The agreement allows Apple to sell products of $488 (6 million rupiah) value and above.
As said by Suryawirawan, director general of metal, machines, transport equipment and electronics at the industry ministry, ” they can distribute devices priced 6 million rupiah ($448) and above. That means all iPhones can be distributed.”
With Samsung controlling 26 percent of the smartphone sales in Indonesia, and China’s OPPO holding 19 percent market share, Apple will have tough competition for one of the biggest social media markets worldwide.
The company has been trying to enter the market for some time, however, as Q3 of 2016 showed Apple’s first decline in revenue in over 15 years, this is a very important moment. As the iPhone comprises two thirds of the of the company’s total revenue the success of this market would have a large impact on revenue.
If you would like to discuss the R&D Tax Incentive further, please do not hesitate to contact one of Swanson Reed’s offices today.