Apple Anticipates iPhone Sales Recovery in China
Stock Price Rises 2% Amid Hopes for AI Integration
iPhone manufacturer Apple is reportedly collaborating with China's Alibaba to integrate artificial intelligence (AI) into its devices, including the iPhone, according to U.S. IT media The Information on the 11th (local time).
Alibaba, which operates China's largest e-commerce platform, launched a new AI model called 'Qwen 2.5-Max' on the 29th of last month. Alibaba claimed that this model outperforms all areas of AI models from Chinese AI startup DeepSeek's V3, OpenAI's GPT-4o (GPT-4 Omni), and Meta's LLaMA 3.1.
Sources reported that Apple and Alibaba have submitted an approval application to regulatory authorities to install AI features jointly developed by the two companies into iPhones and other devices.
Last year, Apple selected Baidu, China's largest portal search company, as a key partner, but judged that Baidu's AI technology did not meet the standards required to operate Apple's AI system, 'Apple Intelligence.' Subsequently, Apple reviewed models developed by Tencent, ByteDance (the parent company of TikTok), Alibaba, and DeepSeek. According to the media, DeepSeek was not selected due to a lack of personnel and experience necessary to support a large customer base.
One reason Apple chose Alibaba is that Alibaba possesses vast data on users' shopping and payment habits, which can help train the model and provide more customized services, sources explained.
Through this collaboration with Alibaba, Apple expects to resolve uncertainties related to AI strategies, which had been one of the reasons for sluggish iPhone sales in China. Unlike other countries, integrating AI features in China requires using AI models developed by Chinese companies. As a result, Apple has faced difficulties incorporating AI features in China since the launch of the iPhone 16 last year. Apple also saw a decline in iPhone sales in China by 11.1% year-on-year in the fourth quarter of last year, losing ground to local competitors such as Vivo and Huawei.
Apple appears to anticipate a recovery in iPhone demand in China through the integration of AI features. Tim Cook, Apple's CEO, stated after last month's earnings announcement, "The iPhone 16 sold better in markets where Apple Intelligence is available," indicating that the introduction of AI features in the Chinese market could help restore iPhone sales.
Amid these expectations, Apple's stock price closed up more than 2% in the New York stock market on the same day.
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