Alibaba Confirms AI Deal with Apple to Boost iPhone Features in China
Alibaba on Thursday confirmed its partnership with Apple to bring advanced AI capabilities to iPhones sold in China. The collaboration is a strategic step for Apple, which has faced declining sales in the region. According to Apple’s latest earnings report, iPhone sales in China dropped 11% year-over-year, signaling the urgency to regain market share in the world’s largest smartphone market.
Joseph Tsai, Alibaba’s chairperson, shared details of the partnership during Dubai’s World Government Summit. “Apple talked to a number of companies in China,” Tsai said. “In the end, they chose to do business with us. They want to use our AI to power their phones. We feel extremely honored to do business with a great company like Apple.”
From Baidu to Alibaba: Navigating AI Partnerships
Apple’s decision to collaborate with Alibaba follows challenges with earlier AI partners. Reports suggest Apple’s previous arrangement with Baidu struggled to adapt to iPhone needs. The company also explored potential partnerships with ByteDance and DeepSeek before settling on Alibaba. Such partnerships are critical for U.S. firms like Apple as they navigate strict regulatory frameworks in China. Both companies are said to have submitted the required documentation to Chinese authorities for approval.
The partnership could provide a much-needed boost for Apple. CEO Tim Cook recently highlighted the absence of Apple Intelligence, the company’s in-house AI solution, as a factor in declining sales. “During the December quarter, we saw stronger year-over-year performance in markets where we rolled out Apple Intelligence,” Cook told CNBC. However, delays in deploying the AI solution have hindered growth, especially as competitors like Google continue to expand their AI offerings across Android devices.
Tough Competition in China’s Smartphone Market
Apple’s struggles in China are compounded by fierce competition. According to Canalys, Vivo led the Chinese smartphone market in Q4 of last year with a 17% share. Huawei, which has made a remarkable recovery following earlier U.S. sanctions, grew shipments by 37% year-over-year, capturing 16% of the market. Apple’s market share, which was 24% in the same quarter last year, dropped to 15%, tying with Xiaomi and Oppo for third place.
The Alibaba partnership is expected to help Apple regain some of its lost ground. However, the company faces significant hurdles, including tariffs and ongoing trade tensions, which could further impact its performance in China.
Looking Ahead
Apple is banking on this partnership to deliver AI-driven features that resonate with Chinese consumers. While the regulatory landscape remains a challenge, aligning with Alibaba—a local tech giant—may strengthen Apple’s position in the market.
As Apple gears up to introduce its AI-enhanced iPhones in China, the collaboration with Alibaba could serve as a pivotal moment in its efforts to stay competitive in one of its most critical markets.