Apple has confirmed a partnership with Alibaba to integrate AI features into iPhones sold in China. The move comes as Apple struggles with declining sales in the world’s largest smartphone market, where iPhone shipments dropped 11% year-over-year.
Alibaba’s chairperson, Joseph Tsai, stated that Apple considered multiple AI providers before selecting Alibaba, calling the partnership an honor. Reports suggest that Apple’s previous AI deal with Baidu faced challenges, leading the company to explore alternatives, including ByteDance and DeepSeek, before finalizing the deal with Alibaba.
Apple’s decision is seen as a strategic move to secure regulatory approvals in China, where foreign tech companies must collaborate with local firms to comply with government policies. Both Apple and Alibaba have submitted the necessary documentation to authorities for review. The partnership is also a response to growing domestic competition, with Chinese smartphone brands like Vivo, Huawei, and Xiaomi gaining market share.
Apple, once the market leader with a 24% share, has now fallen to 15%, tying with Xiaomi and Oppo. Huawei, in particular, has seen a strong rebound, increasing shipments by 37% year-over-year.
CEO Tim Cook recently acknowledged that the absence of Apple Intelligence, the company’s in-house generative AI, has impacted iPhone sales in global markets. Apple is hoping that AI-powered features, introduced through the Alibaba partnership, will help drive a new iPhone “super cycle,” boosting demand. Meanwhile, Google continues to expand its AI offerings through Samsung and Pixel devices, intensifying competition.
Despite the promising partnership, Apple’s future in China remains uncertain. Ongoing trade tensions and tariffs could further affect sales, and regulatory approval for the Alibaba deal is still pending. While Apple hopes to regain its position in China, external challenges may continue to impact its long-term growth in the region.
