BUSINESS

Apple, Alibaba Join Forces to Bring AI to iPhones in China

Published: Feb. 13, 2025 12:16 a.m. GMT+8

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“Hello Apple Intelligence” on the screen of an Apple iPhone 16 Plus during the first day of in-store sales at Apple's Fifth Avenue store in New York, on Sept. 20, 2024. Photo: Bloomberg

Apple Inc. has teamed up with e-commerce giant Alibaba Group Holding Ltd. to develop artificial intelligence (AI) features for iPhones in China, sources familiar with the matter told Caixin.

The iPhone maker is intensifying its collaboration with Alibaba on AI large model technology, but it remains unclear whether Apple will work exclusively with a single company, according to three sources.

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Apple Inc. and Alibaba are collaborating on AI features for iPhones in China, amid speculation about Apple's AI strategy and competition from domestic firms.
Alibaba's shares rose by 8.6% before closing 1.3% higher; Apple's stock gained 2.18%, following news of potential AI collaboration.
Despite Apple's AI developments, including plans for a Chinese AI feature by 2025, its market share in China faces pressure, with a 17% decline in shipments in 2024.

AI generated, for reference only

Who’s Who

Apple Inc.: Apple Inc. is collaborating with Alibaba on AI features for iPhones in China, aiming to enhance its AI strategy amidst market challenges from competitors like Huawei and Oppo. In 2024, Apple experienced a 17% decline in Chinese market shipments, with its revenue from the Greater China region falling by 11%. The company's iPhone 16 series launch had minimal impact, contributing to a 25% decline in Q4 shipments.

Alibaba Group Holding Ltd.: Alibaba Group Holding Ltd. is collaborating with Apple Inc. to develop AI features for iPhones in China. Its shares surged following this news. Alibaba Cloud released the AI large language model Qwen2.5-Max, which ranked 7th globally. Despite competition with other Chinese tech firms and Apple's scrutiny due to App Store commission disagreements, Alibaba remains a strategic partner for Apple's Chinese AI endeavors.

Huawei Technologies Co. Ltd.: Huawei Technologies Co. Ltd. is a domestic competitor to Apple in China, experiencing a revival with a 37% increase in smartphone shipments in 2024. It is also integrating AI features into its devices, leveraging models like DeepSeek-R1 for personal assistants and smart car systems. Huawei's market performance has been strong, placing it among the top five smartphone brands by shipment volume in China, despite being a target of U.S. sanctions.

Oppo Co. Ltd.: Oppo Co. Ltd. is a Chinese smartphone brand that began introducing AI features in late 2023, making them a key selling point. The company plans to integrate DeepSeek-R1 into their foldable smartphone, which is due for release in February 2024. This new model will enable capabilities like voice activation, internet searches, and natural language conversations, positioning Oppo as a competitive player in the AI-enabled smartphone market.

OpenAI: In June, Apple partnered with OpenAI to launch its first AI feature, Apple Intelligence. This feature integrates ChatGPT into the Apple ecosystem, enabling document editing, content summarization, and AI-powered photo editing. The feature was initially rolled out to American users in October and later made available to English-speaking users in the UK, Australia, Canada, Ireland, New Zealand, and South Africa.

Baidu Inc.: Baidu Inc. was considered as a potential AI technology partner for Apple in China. However, integration with Apple may be challenging because Baidu's large model team and business cooperation team are separate, making collaboration more complex.

Tencent Holdings Ltd.: Tencent Holdings Ltd., a Chinese tech company, is in competition with Apple over App Store commissions. Its super app, WeChat, has clashed with Apple as Apple pressures companies to stop bypassing its payment system. Tencent is one of the rumored candidates for collaboration with Apple in developing AI features in China, but it remains unclear if a partnership will materialize.

ByteDance Ltd.: ByteDance Ltd., known for its app TikTok, is one of the Chinese tech companies that could potentially partner with Apple for AI features in China. However, it has conflicts with Apple over the 30% App Store commission as Apple pressures apps to use its payment system. ByteDance joins other firms like Baidu, Tencent, and Zhipu AI as speculated candidates for collaboration with Apple in the Chinese market.

Zhipu AI: Zhipu AI is a Chinese AI startup with over 1,000 employees, recently forming a strategic partnership with Samsung China. It lacks the scale and experience needed to serve major clients like Apple. Zhipu AI's technology powers Samsung smartphones for the Chinese market, with the first launch in January 2024. Despite growing in the AI space, they remain smaller than competitors.

DeepSeek: DeepSeek is a Chinese startup whose large AI model gained popularity, prompting companies like Lenovo, Huawei, Honor, and Oppo to integrate it into products, especially for personal assistants and smart car systems. For example, Oppo's foldable smartphone, releasing in February, will feature DeepSeek-R1, enabling capabilities like voice activation and natural language conversations.

Samsung China: Samsung China recently announced a strategic partnership with Chinese AI startup Zhipu AI. This collaboration led to the launch of the first Samsung smartphone powered by Zhipu AI's technology for the Chinese market in January 2024.

Honor: Honor, a Chinese smartphone brand, began introducing AI features in the second half of 2023, making AI a key selling point. Following DeepSeek's popular large model, Honor, along with other companies like Lenovo and Huawei, announced plans to integrate it into their products. In 2024, Honor was among the top five smartphone brands in China by shipment volume.

Vivo: Vivo is one of the top five smartphone brands in China by shipment volume in 2024, alongside Huawei, Apple, Oppo, and Honor. It gained market share from Apple following the release of the iPhone 16 series in September 2024, which failed to make a significant impact, contributing to Apple’s decreased smartphone shipments in China during the fourth quarter.

Lenovo: The article mentions that after DeepSeek's large model gained popularity, companies including Lenovo announced plans to integrate it into their products, particularly for personal assistants and smart car systems.

AI generated, for reference only

What Happened When

Second half of 2023：: Chinese brands, including Honor, Oppo, vivo, and Huawei, began introducing AI features, making AI a selling point for their devices

January 2024：: Zhipu AI announced a strategic partnership with Samsung China, with the first Samsung smartphone using Zhipu AI's technology launched in this month

September 2024：: Alibaba's shares surged as much as 8.6% in New York, marking their biggest jump since this month

September 2024：: The release of the iPhone 16 series failed to make much of an impact on the market, according to Canalys

Fourth quarter of 2024：: Apple experienced a decline in smartphone shipments in China, dropping 25% year-on-year, while Huawei saw a 37% increase in shipments