SHANGHAI, February (Reuters) – Alibaba (9988.HK), opens new tab will partner with Apple (AAPL.O), opens new tab to support iPhones’ AI services offering in China, its chairman said on Thursday, a move likely to help the U.S. company ease falling smartphone sales in its key market.
For Alibaba, the partnership is a major win in China’s competitive AI market that is home to DeepSeek, which made headlines this year with models developed at a fraction of the cost of Western rivals.
The landmark deal also resolves months of speculation over Apple’s AI strategy in the region as the iPhone maker had been in talks with Chinese tech leaders including Baidu (9888.HK), opens new tab, ByteDance and Tencent (0700.HK), opens new tab, Reuters and the Information have reported.
“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.
Apple continues to work with Baidu on AI features for iPhones in China, The Information reported on Thursday, citing two people with direct knowledge of the matter.
Baidu did not immediately respond to a Reuters request for comment.
While Apple’s phones outside China utilize a combination of its proprietary Apple Intelligence and OpenAI’s ChatGPT, Tsai did not specify whether the Alibaba partnership would follow a similar model.
In China, consumer-facing AI products require regulatory approval, and The Information reported earlier that both Alibaba and Apple have already submitted materials to authorities.
The Hong Kong-listed shares of Alibaba jumped as much as 9.2% to HK$124.3, their highest since January 2022. The stock pared gains to close up 2.6%.
Apple did not immediately respond to a request for comment.
“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 tech research firm Omdia.
Other analysts said the impact for Apple would depend on how fast it rolled out features in China.
“It won’t be an easy fight as the local competitors have been aggressively marketing their own AI features,” said Will Wong, an analyst with research firm IDC.
CRITICAL TIME
The AI integration comes at a critical time for Apple, which has faced declining iPhone sales in China amid growing competition from domestic rivals, particularly Huawei.
