In a move to strengthen its presence in the Chinese market, Apple Inc. has partnered with Alibaba Group Holding Ltd. to develop and implement artificial intelligence features for iPhone users in China.
This collaboration is expected to enhance the user experience by providing more personalized and localized services, leveraging Alibaba’s extensive consumer data and technological expertise.
The partnership comes after Apple previously collaborated with Baidu Inc. for AI development but found the progress unsatisfactory. Subsequently, Apple evaluated AI models from Tencent, ByteDance, and DeepSeek before selecting Alibaba as its preferred partner. The decision was influenced by Alibaba’s vast troves of personal data on users’ shopping and payment habits, which could help train models and deliver more customized services.
Both companies have submitted their co-developed AI features for approval to China’s cyberspace regulator, with plans to launch the services in April. This initiative is crucial for Apple as iPhone sales in China have been weak recently, partly due to the absence of AI features that were meant to be the chief selling point of its latest devices. The company has forecast strong sales growth in the current quarter, fanning hopes that iPhone demand will rebound.
The announcement of the partnership had a positive impact on the stock market. Alibaba’s U.S. shares rose 1.3% to $112.78, while Apple’s stock increased by 2.2% to $232.62. In contrast, Baidu’s stock declined by 4.7% to $89.44.
Analysts’ View
Analysts view this partnership as a beneficial move, potentially boosting Apple’s competitiveness in the Chinese market. Amit Daryanani, an analyst at Evercore ISI, noted, “We view this as a positive for Apple given their commentary on the recent earnings call that iPhone sales have been stronger in markets where AI features are available.”
By joining forces with Alibaba, Apple aims to regain its competitive edge in China’s rapidly evolving smartphone market, where local competitors have been gaining ground. The integration of advanced AI features tailored to Chinese consumers’ preferences could play a pivotal role in revitalizing iPhone sales in the region.
