Apple partnering with Alibaba to develop AI features for iPhones in China - report
Investing.com - Apple has recently begun to work with Chinese e-commerce titan Alibaba to help build out its artificial intelligence features in China, as the iPhone-maker pushes to revive flagging sales and combat intensifying competition in the country, according to The Information.
U.S.-listed shares in Apple (NASDAQ: AAPL ) and Alibaba (NYSE: BABA ) rose in early trading on Tuesday, while Alibaba-peer Baidu's (NASDAQ: BIDU ) stock price fell by more than 4%.
The companies have submitted AI enhancements developed in China to the local cyberspace regulator, The Information said in its report, citing a person familiar with the matter. It noted that the partnership between Apple and Alibaba had made significant progress.
Apple previously announced a drive to bring AI to its flagship smartphone through what it has called "Apple Intelligence," although a slow international roll-out of the service has recently raised concerns among analysts.
Crucially, Beijing has required Apple to work with domestic firms to construct AI models for handsets sold in China.
Apple has been testing different models from Chinese AI groups since the beginning of 2023 and last year selected Baidu as its primary partner, The Information reported. However, that relationship hit a roadblock when Baidu's progress in developing Apple Intelligence did not meet Apple's standards, The Information added. It remained unclear if Baidu's models have been ruled out entirely by Apple, it said.
Apple subsequently began to seek out other options in recent months, including models from Tencent, ByteDance, Alibaba, and start-up DeepSeek, the news outlet reported.
The news comes after executives at Apple said they now expect sales to grow in the low- to mid-single digits in its fiscal second quarter. The guidance surpassed expectations and pointed to momentum in demand for the iPhone, Reuters reported, citing analysts.
The outlook helped to assuage some worries around sales for the iPhone, which dropped marginally and missed estimates in its key holiday shopping quarter, due in part to the firm's new AI features not being available in some markets -- including China. Still, CEO Tim Cook said Apple Intelligence is helping to lift sales.