By Casey Hall
Shanghai (Reuters) -Alibaba will partner with Apple to support the offer of AI iPhones services in China, its Chairman said Thursday, a move that is likely to help the US company relieve the sales of falling smartphone in its key market .
For Alibaba, the partnership is a major victory in China's competitive AI market home to Deepseek, which made headlines this year with models developed at a fraction of the cost of Western competitors.
The notable deal also resolves months of speculation about Apple's AI strategy in the region as the iPhone manufacturer has been in discussions with Chinese technology leaders including Baidu, ByTedance and Tencent, Reuters and the information that has reported.
“They talked to several companies in China. They finally chose to do business with us. They want to use our AI to power their phones. We feel extremely honorable to do business with a great company like Apple , “said Tsai at the World Government Summit in Dubai.
While Apple phones outside China use a combination of its proprietary apple intelligence and Openai ChatGpt, Tsai did not point out whether Alibaba's partnership would follow a similar model.
In China, AI products facing consumers need regulatory, and the reported information earlier that Alibaba and Apple have already introduced materials to authorities.
Alibaba's shares listed in Hong Kong jumped as much as 9.2% to HK $ 124.3, their highest since January 2022. The stock matched earnings to close 2.6%.
Apple did not immediately respond to a request for a comment.
“Instead of looking at the Alibaba-Apple partnership through China's AI strength lens, the partnership is primarily a recognition of Alibaba's AI capacity,” said Lian Jye Su, chief analyst at the Technology Research Company Omdia.
Other analysts said the impact on Apple would depend on how quickly it would introduce features in China.
“It won't be an easy battle as the local competitors have been marketing their own AI features aggressively,” said Will Wong, an analyst with research firm IDC.
Critical time
AI integration comes at a crucial time for Apple, which has faced the decline of iPhone sales in China in the midst of growing competition from domestic competitors, especially Huawei.
Industry analysts have highlighted the absence of advanced AI features – a key selling point in the latest generation smartphones – as a significant disadvantage to Apple in the Chinese market.
Apple suffered a notable difficulty in China in 2024, losing its crown as the country's leading smartphone seller. For its first financial quarter ending December 28, Apple's Greater China Greater Sales plunged 11% to $ 18.51 billion.