Apple's AI Split: Chooses Alibaba For China And OpenAI For Everyone Else

Apple Inc AAPL tapped Alibaba Group Holding BABA to develop and roll out artificial intelligence features for iPhone users in China, the Information cited an unnamed source familiar with the matter.

Apple’s move marks its attempts to consolidate its position in China as Apple Intelligence capability is unavailable to iPhone users.

It lost market share in the country to government-incentivized local vendors amid intensifying geopolitical tensions with the U.S.

Also Read: Apple’s App Store Booms As ChatGPT, Productivity Apps Drive Revenue Growth, Analyst Says

China also mandated international companies to tap a domestic company as a primary partner, which prompted Apple to partner with Baidu Inc BIDU to develop an AI model, only to part ways later as the latter failed to impress.

Meanwhile, Apple and Alibaba submitted their co-developed Chinese AI features for China’s regulatory approval, Reuters reports.

Apple has also explored Tencent Holding TCEHY, ByteDance, and DeepSeek’s AI models. However, the DeepSeek team lacked the expertise to support a large customer like Apple, according to the report.

DeepSeek’s affordable AI model reports triggered a U.S. tech selloff, with Nvidia Corp NVDA losing $600 billion in market value in a single day.

In the U.S., Apple partnered with Microsoft-backed OpenAI to integrate ChatGPT into iOS 18, iPadOS 18, and macOS 15 Sequoia. The AI feature is available free of charge and does not log user data.

OpenAI targets a billion users by 2025, driven by new AI products, a key partnership with Apple, and significant infrastructure investments.

Recently, Apple’s Tim Cook lauded DeepSeek for driving efficiency. By 2028, Counterpoint expects 90% of smartphones priced above $250 to be Generative AI-capable.

Price Actions: At last check Tuesday, AAPL stock was up 3.05% at $234.60. BABA is up 3.49%.

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