Apple partners with Alibaba for AI expansion in China to compete with Huawei
Apple, aspiring to strengthen its foothold in the world's largest mobile phone market, is forming a partnership with the Chinese tech giant Alibaba to roll out artificial intelligence (AI) services in China. This decision will bring an end to months of speculation and uncertainty regarding Apple's AI strategy in the Chinese market, reports NewsBox.
Alibaba's chairman, Joe Tsai, announced the collaboration on February 13th at the World Government Summit in Dubai, according to CNN.
"Apple was very selective. They engaged in discussions with several companies in China, and ultimately decided to do business with us. They want to leverage our AI for their phones," Tsai stated, without providing details on the launch timelines or exclusivity of the partnership.
Previously, The Information reported that Apple had considered other Chinese AI-focused companies such as DeepSeek, Baidu, ByteDance, and Tencent before opting for Alibaba.
The choice of a local partner was influenced by the complications with complying with Chinese legal and regulatory requirements. Currently, Apple can offer its Apple Intelligence AI service in only a limited number of markets, including the USA, Canada, the UK, and Australia. The Chinese government mandates that foreign companies operating in the AI sector must collaborate with local partners and secure regulatory approvals.
Apple faces increasing competition in the Chinese market from domestic producers like Huawei and Vivo. Analysts note that while AI services could help attract more users to Apple in China, challenges remain.
"Apple is confronted with a significantly tougher competitive environment in China, especially with the strong resurgence of Huawei. Relying solely on AI services might not be sufficient to turn the tide," remarked Lukas Chun, an analyst with the research firm Canalys.
Huawei, despite facing U.S. trade restrictions, has managed to adapt and innovate, resulting in the successful release of the Mate 60 Pro in 2023. Consequently, Huawei's market share in China reached 16% last year, surpassing Apple's 15%, according to Canalys. In 2023, Apple was the leading phone seller in the country with a 19% market share, while Huawei held 12%
The confirmation of the partnership with Apple has positively influenced investor confidence in Alibaba. The company's Hong Kong-traded shares have surged over 40% since hitting a two-year low in January.