Apple-Alibaba partnership
Apple has entered into an artificial intelligence (AI) development partnership with Alibaba in China, following a series of strategic evaluations and collaborations with several major Chinese tech giants. Initially, Apple chose Baidu as its primary partner for AI development in 2024, but the partnership was terminated after Baidu failed to meet Apple’s standards for AI model development. After this setback, Apple explored collaborations with other major players in the Chinese tech industry, including Tencent, ByteDance, and Deepseek, ultimately choosing Alibaba.
The collaboration with Alibaba marks a significant step in Apple’s AI strategy for the Chinese market. The two companies have submitted their jointly developed AI features for China to the country’s internet regulatory authorities for approval, signaling progress in their partnership. This collaboration is crucial for Apple, as the company aims to integrate advanced AI features into iPhones for Chinese users, which could help it regain competitiveness in the market, where local brands are gaining an edge with AI-enhanced devices.
Apple’s market share in China declines
The partnership with Alibaba comes at a critical time for Apple, as the company has lost its position as the top smartphone seller in China. In 2024, Apple experienced its largest annual sales decline in China, with a 17% drop for the year, including a 25% decline in the final quarter. This significant drop caused Apple’s market share to fall to just 15%, placing it in third place, behind local competitors Vivo (17%) and Huawei (16%).
The reasons for Apple’s decline in the Chinese market include:
- The latest iPhone lags behind local competitors in AI features.
- Huawei’s strong comeback with new phones equipped with locally manufactured chips.
- Increased competition from local brands offering advanced features.
In response to this trend, Apple has rarely offered discounts and promotions on its iPhone models. The collaboration with Alibaba in AI development is part of Apple’s strategy to regain its competitive edge in the Chinese market by offering more advanced AI features tailored to local users.
