Alibaba will collaborate with Apple to support AI-powered services on iPhones in China, Chairman Joe Tsai announced Thursday. The partnership, aimed at boosting Apple’s smartphone sales in its key market, sent Alibaba’s Hong Kong-listed shares soaring to a three-year high.
The deal marks a major step for Alibaba in China’s competitive AI sector, where companies like DeepSeek have made waves with cost-efficient AI models. It also settles months of speculation over Apple’s AI strategy in China, as the tech giant had been in talks with local firms including Baidu, ByteDance, and Tencent.
“They talked to a number of companies in China. In the end, they chose to do business with us,” Tsai said at the World Government Summit in Dubai. However, he did not clarify whether the Alibaba partnership would follow Apple’s global AI model, which integrates proprietary Apple Intelligence and OpenAI’s ChatGPT.
In China, AI services require regulatory approval, and reports indicate both Alibaba and Apple have submitted materials to authorities. Following the announcement, Alibaba’s stock jumped as much as 9.2% to HK$124.3, its highest since January 2022, before closing 2.6% higher.
Industry analysts see the deal as a validation of Alibaba’s AI capabilities rather than a broader endorsement of China’s AI dominance. Some experts caution that Apple’s success will depend on how quickly it rolls out AI features in China, where competitors have aggressively marketed their own AI-powered smartphones.
A Crucial Move Amid Apple’s Struggles in China
Apple has been grappling with declining iPhone sales in China amid fierce competition from domestic brands like Huawei. The lack of advanced AI features has been cited as a major disadvantage for the company in the region’s smartphone market.
Apple lost its position as China’s top smartphone vendor in 2024, with Greater China sales dropping 11% to $18.51 billion in its fiscal first quarter. Market research firm Canalys reported that Apple’s annual shipments in China fell 17%, pushing it to third place with a 15% market share behind Vivo (17%) and Huawei (16%).
Meanwhile, Alibaba has emerged as a strong AI contender in 2025, with its stock surging over 40% this year. In late January, the company introduced Qwen 2.5, an advanced AI model that it claims outperforms DeepSeek-V3, a model that gained attention for its high capabilities at a lower cost.
