Apple Partners with Alibaba to Bring AI to iPhones in China

Apple has selected Alibaba as its partner to bring AI services to iPhone users in China, revealed Alibaba chairman Joe Tsai on Thursday.

The move comes as Apple looks to better its performance in the Chinese market, where falling iPhone sales have raised concerns. By teaming up with Alibaba, Apple can enhance its devices with advanced AI features that could help reverse recent sales declines.

For Alibaba, the partnership marks a significant victory in a fiercely competitive AI landscape. China is home to several innovative companies, including DeepSeek, known for developing models at a fraction of the cost of Western rivals. After months of speculation and discussions with multiple tech leaders—including Baidu, ByteDance, and Tencent—Apple chose Alibaba to power its AI services in China.


"They talked to a number of companies in China. In the end they chose to do business with us. They want to use our AI to power their phones. We feel extremely honoured to do business with a great company like Apple," Tsai said at the World Government Summit in Dubai.

While Apple continues to work with Baidu on additional AI features for its iPhones in China, this new deal with Alibaba signals a broader effort to integrate advanced artificial intelligence across its product range. Outside China, Apple relies on a mix of its proprietary Apple Intelligence and OpenAI's ChatGPT. It remains unclear whether the Alibaba-powered solution will follow the same model, but both companies have purportedly submitted the required documents to Chinese regulators, ensuring compliance with local rules for consumer-facing AI products.

Reuters notes that announcement comes at a time when Apple is under significant pressure to regain market share in China. In its fiscal first quarter ended December 28, Greater China sales fell by 11% to $18.51 billion. Annual shipments in China also dropped by 17%, as domestic manufacturers surged ahead. Competitors like Vivo and Huawei have captured larger portions of the market, pushing Apple down to third place. Industry analysts see the new partnership as a timely effort by Apple to address these challenges.

Analysts emphasize that the success of the collaboration will depend on the speed at which Apple can roll out new AI features in China. "Instead of viewing the Alibaba-Apple partnership through the lens of China's AI strength, the partnership is mainly a recognition of Alibaba's AI capability," said Lian Jye Su, a chief analyst at Omdia. Will Wong, an analyst with IDC, added, "It won't be an easy fight as the local competitors have been aggressively marketing their own AI features."


Alibaba's stock climbed on the news, indicating confidence in the company's technology. Shares on the Hong Kong market jumped 9.2% to HK$124.3 before closing 2.6% higher. Apple has not yet commented on the collaboration, but it's seen as an essential step toward reviving Apple's appeal in one of the world's most challenging smartphone markets.

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