Apple (AAPL.O) has partnered with Alibaba (9988.HK) to develop artificial intelligence (AI) features for iPhone users in China, according to a report from The Information on Tuesday. The move aims to strengthen Apple’s AI strategy in China, where it has been losing market share to domestic competitors like Huawei, whose smartphones have integrated AI tools since last year.
Key Highlights
- Apple stock rose 1.5% in early trading following the news.
- U.S.-listed Alibaba shares jumped 2.6%.
- Apple had initially selected Baidu as its AI partner but later shifted focus due to development shortcomings.
- The AI tools co-developed with Alibaba have been submitted for approval to China’s cyberspace regulator.
Why It Matters
Apple’s AI strategy in China has been under scrutiny, especially as iPhone sales dipped in the holiday quarter. AI features were meant to be a key selling point of the latest iPhone models, but the company struggled to deliver them.
Meanwhile, domestic rivals like Huawei have gained ground, leveraging advanced AI functionalities in their devices.
Apple’s AI Search for a Partner
Apple initially chose Baidu to support its AI development but later found its models inadequate. The company then explored potential collaborations with:
- Tencent (0700.HK)
- ByteDance (TikTok’s parent company)
- Alibaba
- Deepseek (which was later ruled out due to lack of experience and resources)
Alibaba’s Role in Apple’s AI Push
The report suggests that Apple ultimately picked Alibaba due to its extensive data on users’ shopping and payment habits. These insights could be leveraged to enhance AI-powered services, making them more personalized and effective.
Looking Ahead
Apple has forecast strong sales growth in the current quarter, fueling optimism that iPhone demand could rebound. The partnership with Alibaba could be a crucial step in revitalizing its presence in China.
Neither Apple nor Alibaba has commented on the report as of now.
