Yes. But really Indonesia has taken over from South Korea (and China and Mexico for some parts of the market). E.g. PRS used to make their SE line in South Korea and the quality was excellent. "Good guitar" is somewhat subjective. US brands like PRS, Gibson and Fender are still able to charge a premium for a US made instrument. This isn't necessarily because the US has some abilities that the foreign makers don't, it's more of a marketing strategy.

I thought it was because US had better quality controls and finer manufacturing specs.