Apple has chosen to collaborate with Chinese tech giant Alibaba to introduce AI-powered features to the Chinese market, ending months of uncertainty about how the Cupertino-based company would navigate local regulatory and market challenges.
In a statement made during the World Governments Summit in Dubai, Joe Tsai, chairman of Alibaba, confirmed the partnership, noting that Apple had carefully evaluated various companies in China before selecting Alibaba to help power its AI services. “Apple has been very selective. They talked to a number of companies in China, and in the end, they chose to do business with us. They want to use our AI to power their phones,” Tsai said. However, he did not provide specific details about the timeline or whether Alibaba would be Apple’s exclusive partner in China.
Apple has faced regulatory hurdles in China, where the government mandates that foreign companies collaborate with local firms to operate AI services. Due to this, Apple has only rolled out its AI service, Apple Intelligence, in select markets, including the U.S., Canada, the U.K., and Australia. The Chinese market has long been critical to Apple’s global growth, but local compliance issues and competition from domestic brands have limited the company’s ability to expand AI offerings.
The partnership marks a significant development, as Apple had been considering other Chinese AI firms such as Baidu, Tencent, ByteDance, and DeepSeek before finalizing its deal with Alibaba, according to reports by The Information. Apple has not yet commented further on the partnership.
For Apple, this move is seen as crucial as it faces increasing competition in the Chinese smartphone market, where it has been losing ground to local rivals such as Huawei and Vivo. Apple, which once dominated China’s premium smartphone market, is now facing a more challenging competitive landscape, particularly due to Huawei’s resurgence. In 2023, Huawei’s market share reached 16%, surpassing Apple’s 15%, according to Canalys data. Huawei’s growth was fueled by innovation and strong domestic support, especially following trade restrictions imposed by the U.S. government in 2019. The launch of Huawei’s Mate 60 Pro in 2023 further solidified its position.
Canalys research analyst Lucas Zhong noted that while AI services could help Apple gain users in China, overcoming local competition, particularly from Huawei, will require more than just technological advancements. “Relying solely on AI services may not be enough to turn the tide,” Zhong said.
Investors have responded positively to the news of Apple’s collaboration with Alibaba, with the Chinese tech giant’s Hong Kong-listed shares rising by more than 40% since January. This surge follows Alibaba’s unveiling of its new Qwen AI model, which has been positioned as a competitor to other market leaders like DeepSeek’s recently launched AI model.
Meanwhile, Elon Musk, speaking remotely at the same event, teased the upcoming release of the next-generation AI model from his company xAI, Grok 3. Musk claimed that Grok 3 would outperform all other AI chatbots currently on the market, citing impressive test results.
Apple’s partnership with Alibaba represents a key step as it seeks to reinvigorate its position in China, a market that remains vital for the company’s long-term strategy in the mobile phone sector.
