Apple (NASDAQ:AAPL) has taken a step toward enhancing its artificial intelligence (AI) capabilities in China by partnering with Alibaba. The collaboration aims to integrate Alibaba’s AI technology into Apple’s iPhones, allowing the company to navigate stringent regulatory requirements in the Chinese market. Apple has been exploring partnerships with multiple Chinese firms to enable the deployment of AI-enabled features in the region, as local laws require AI models to undergo extensive testing and approval processes. The agreement with Alibaba highlights Apple’s strategic approach to maintaining its presence in China while complying with regulatory hurdles.
In previous attempts to secure a local AI partner, Apple reportedly considered working with firms such as Baidu, Tencent, ByteDance, and DeepSeek. While Baidu initially engaged in discussions with Apple, the collaboration was discontinued after failing to meet Apple’s expectations. Similarly, DeepSeek was evaluated but did not have the necessary resources to support Apple’s large-scale operations. The partnership with Alibaba suggests that Apple found Alibaba’s AI capabilities to be aligned with its requirements, providing a solution for launching AI-powered iPhones in China.
Why Did Apple Choose Alibaba?
Apple’s decision to work with Alibaba was influenced by multiple factors. Alibaba’s AI technology meets the regulatory requirements set by Chinese authorities, which is crucial for Apple to operate in the region. Additionally, Alibaba possesses extensive experience in AI development, making it a viable partner for Apple’s AI-powered smartphones. Apple has been selective in choosing a partner, and Alibaba emerged as the preferred choice after an extensive evaluation process.
What Challenges Does Apple Face in China?
The Chinese market presents significant challenges for Apple, including a decline in sales and increased competition from local smartphone brands. In the last quarter, Apple’s revenue from China dropped by 11.1%, marking one of the largest declines in recent years. Regulatory barriers further complicate Apple’s strategy, as the country enforces strict oversight on AI technologies. By collaborating with Alibaba, Apple seeks to overcome these difficulties while maintaining a competitive edge in China’s mobile market.
Joe Tsai, Chairman of Alibaba, acknowledged the partnership and its significance in the Chinese market.
“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,” Tsai stated.
He also emphasized the necessity of working with Chinese firms due to regulatory constraints.
“They want to use our AI to power their phones, so we’re very fortunate and extremely honored to be able to do business with a great company like Apple,” he added.
Apple’s CEO Tim Cook also highlighted the importance of AI in driving iPhone sales.
“We did see that the markets where we had rolled out Apple Intelligence, that the year-over-year performance on the iPhone 16 family was stronger than those where Apple Intelligence was not available,” he said.
This suggests that AI-powered features could play a crucial role in Apple’s efforts to boost sales in China.
The collaboration between Apple and Alibaba reflects the increasing need for localized AI solutions in global markets. As governments impose stricter regulations on AI development, partnerships with domestic firms may become a necessary strategy for tech companies seeking expansion. For Apple, the arrangement is not only about compliance but also about sustaining its competitive position in China amid slowing growth. Meanwhile, Alibaba benefits by establishing a stronger presence in AI-driven technologies, reinforcing its role as a key player in China’s tech ecosystem.
