Apple is set to collaborate with Chinese tech giant Alibaba to introduce AI services in China, the world’s largest smartphone market, ending months of speculation about the company’s plans. Joe Tsai, chairman of Alibaba, confirmed the partnership on Thursday during his speech at the World Government Summit in Dubai, stating, “Apple has been very selective. They talked to a number of companies in China, and in the end, they chose to work with us. They want to use our AI to power their phones.” However, Tsai did not provide further details such as a timeline for the launch or whether Alibaba would be the exclusive partner.
The partnership was first reported by The Information, which mentioned that Apple had considered other Chinese AI firms like DeepSeek, Baidu, ByteDance, and Tencent before ultimately choosing Alibaba.
Due to local regulations and compliance requirements, Apple has only been able to release its AI service, Apple Intelligence, in a few markets, including the U.S., Canada, UK, and Australia. The Chinese government requires foreign AI companies to collaborate with local partners and obtain regulatory approval.
Apple has been losing market share in China to local competitors such as Huawei and Vivo. According to Lucas Zhong, a research analyst at Canalys, while AI services could help Apple attract users in China, the company still faces significant challenges. “Apple faces a much more challenging competitive landscape in China, especially with Huawei’s strong resurgence. Relying solely on AI services may not be enough to reverse the situation,” he noted.
Apple had once been dominant in China’s high-end smartphone market, but it faced strong competition as Huawei grew in prominence. However, the company’s fortunes shifted in 2019 when the U.S. government imposed trade restrictions on Huawei.
Initially, the U.S. trade restrictions significantly impacted Huawei’s business. However, these challenges eventually pushed the company to adapt and innovate, culminating in the launch of the Mate 60 Pro in 2023, which triggered an investigation by the U.S. government. Huawei’s transformation, combined with rising patriotic sentiment among some Chinese consumers, has fueled its comeback.
In 2023, Huawei captured a 16% market share in China, surpassing Apple, which held 15%, according to Canalys data. However, Apple remained the top mobile phone seller in the country last year with a 19% market share, while Huawei trailed at 12%.
The announcement of the partnership with Apple has boosted investor confidence in Alibaba, with its Hong Kong-listed shares rising by over 40% since reaching a two-year low in January.
After Chinese startup DeepSeek revealed an impressive AI model in January that caught the attention of Wall Street, Alibaba also unveiled the latest version of its Qwen AI model, claiming it outperformed DeepSeek’s R1 model.
During the same event, Elon Musk, speaking via video, announced that his company xAI would release the next generation of its large language model, Grok 3, within one to two weeks. Musk touted Grok 3 as the best AI chatbot on the market, claiming that it had outperformed all existing models in their tests.
Musk founded xAI to challenge OpenAI, the company he also co-founded, along with other AI giants like Google.