Apple has chosen to partner with Chinese tech giant Alibaba to bring its AI services to the world's largest mobile phone market, ending months of uncertainty. The partnership, confirmed by Alibaba Chairman Joe Tsai, aims to leverage Alibaba's AI capabilities to power Apple's devices in China.
Apple has chosen to partner with Chinese tech giant Alibaba to bring its AI services to the world's largest mobile phone market. This decision ends months of speculation for the Cupertino-based company. Joe Tsai, chairman of Alibaba, revealed the partnership during a speech at the World Governments Summit in Dubai on Thursday. While he didn't provide specifics like a release timeline or exclusivity, Tsai stated, ' Apple has been very selective.
They talked to a number of companies in China, and in the end, they choose to do business with us. They want to use our AI to power their phones.' This news was first reported by The Information, which also mentioned that Apple considered other Chinese AI companies like DeepSeek, Baidu, ByteDance, and Tencent before selecting Alibaba. CNN has reached out to both Apple and Alibaba for further comment. Apple has been navigating local compliance and regulatory issues that prevented it from fully launching its AI service, Apple Intelligence, in most markets, including its AI-powered features in its iPhone. The Chinese government requires foreign AI operators to partner with a local company and obtain regulatory approval to operate within the country. Apple has been experiencing declining market share in China compared to domestic rivals like Huawei and Vivo. Lucas Zhong, a research analyst at Canalys, a market research firm, believes that while AI services could help Apple regain users in China, the challenges are significant. 'Apple faces a much more challenging competitive landscape in China, especially amid Huawei’s strong resurgence. Relying solely on AI services may not be enough to turn the tide,' he stated. Apple previously dominated China's high-end smartphone market until Huawei's rise posed a serious challenge. However, in 2019, US President Donald Trump imposed trade restrictions on Huawei, initially crippling its business. Over time, these restrictions spurred Huawei's adaptation and innovation, culminating in the launch of the Mate 60 Pro in 2023, which triggered a US government investigation. Huawei's transformation, combined with strong patriotic sentiment among some Chinese consumers, has fueled its resurgence. Last year, Huawei secured a 16% market share in China, surpassing Apple's 15%, according to Canalys data. In 2023, Apple regained the top spot as the leading mobile phone seller in China with 19% market share, while Huawei trailed behind with 12%. The confirmed partnership with Apple has boosted investor confidence in Alibaba, with its Hong Kong-listed shares surging by over 40% since reaching a two-year low in January. This surge follows Alibaba's unveiling of its latest Qwen AI model, claiming it surpasses its competitor DeepSeek's R1 model. This development comes amidst a flurry of AI advancements, with Elon Musk, the founder of xAI, announcing the imminent release of his company's next-generation large language model, Grok 3, within one to two weeks. Musk asserts that Grok 3 outperforms any existing AI chatbot on the market based on their internal testing.
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