Alibaba's chairman announced on Thursday that the company will collaborate with Apple to enhance AI services for iPhones in China, a move expected to help Apple counter declining smartphone sales in its major market.
For Alibaba, the partnership signifies a significant achievement in China's competitive AI sector, a market that has gained attention for models developed at lower costs compared to Western competitors.
The agreement resolves speculation around Apple's AI strategy in the region after engaging with Chinese tech giants such as Baidu, ByteDance, and Tencent. Alibaba's chairman expressed appreciation for Apple's decision to engage with them stating, "We feel extremely honored to do business with a great company like Apple."
In addition to the partnership with Alibaba, Apple reportedly continues collaboration with Baidu on AI features for iPhones in China. While specific details about the collaboration were not disclosed, regulatory approvals for consumer AI products are in progress.
Following the announcement, Alibaba’s shares surged, highlighting investors' confidence in the company's AI capabilities and growth potential. Apple, on the other hand, faces challenges in the Chinese market with declining sales and increasing competition from local rivals like Huawei.
Analysts emphasize the importance of timely rollout of AI features in China to compete effectively in the market, noting that local competitors have been aggressively promoting their own AI technologies. Apple's struggle in the Chinese market was evident in recent sales data, with domestic manufacturers surpassing Apple in market share.
Alibaba, on the contrary, has been gaining favor with investors, showcasing a stock price increase of over 40% in early 2025. Their latest artificial intelligence model, Qwen 2.5, has attracted attention for its capabilities and cost-effectiveness in the AI domain.