TMTPost -- Apple Inc. may be closer to roll out Apple Intelligence, its advanced personal artificial intelligence (AI) system, in China through its partnership with Alibaba Group.

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Apple recently started working with Alibaba to offer AI features on its devices such as the iPhone in China, the Information reported cited  on Tuesday, citing people with knowledge of the matter. The report suggested the partnership made significant progress as two companies have submitted the AI features they co-developed for regulatory approval.

Apple last year chose Baidu to be the primary partner for rollout of AI features in China but Baidu’s AI models failed to meet Apple standards, so the iPhone maker began to weigh other optional Chinese models developed by Tencent, ByteDance, Alibaba and DeepSeek, according to the report. It said Apple didn’t select DeepSeek model for the upstart lacked the manpower and experience to serve a large customer like Apple.  

Apple was dissatisfied with different Chinese-developed AI models for their ability to understand user intentions and incorporate their real-world phone usage into the generated responses, while Alibaba, as China’s top e-commerce company with more personal data on Chinese consumers than domestic peers, created AI models that can help Apple Intelligence to deliver more customized services to users in China, per the sources.

Apple introduced Apple Intelligence at the Worldwide Developers Conference (WWDC) in last June, and the AI system is now available in U.S. and six other countries for English version. Apple said last month it will release a simplified Chinese version in April. But it’s still unclear when Apple Intelligence can be available for users in China for Apple has to obtain regulatory approval for launch of the AI software.

Apple was reported in December it had formally partnered with Baidu to launch Apple Intelligence in China in 2025, but two companies have clashed over use of iPhone user data to improve models. Baidu’s large language models (LLMs) were said  to have struggled to under stand prompts and provide accurate response to common scenarios posed by iPhone users. Reuters reported that month Apple was in talks with tech giant Tencent and ByteDance, flirting with the idea of integrating. Apple was discussing with Zhipu AI about deployment of the Beijing-based unicorn’s large model into iPhones sold in China, Chinese news media outlet Yicai learned the same month.

The partnership to roll out Apple Intelligence is part of Apple’s efforts to revive its sales in China. Apple posted last month all-time quarterly records for total quarterly revenue and earnings per share (EPS).  Revenue for the company’s first fiscal quarter ended December 28, 2024 climbed 4% year-over-year to $124.3 billion, beating Wall Street estimated $124.1 billion. EPS jumped 10% year-over-year (YoY) to $2.40, also topping estimates. Service, Mac, iPad each recorded double-digit YoY rise in revenue for the quarter. But Apple’s core product iPhone missed expectation. IPhone sales edged down 0.8% YoY to $69.14 billion, whereas analysts projected $71.04 billion with an nearly 2% YoY increase.

What made investors more concerned is that revenue from Greater China sank 11% YoY to $18.51 billion, recording steepest decline since the quarter ended December 2023. That marks the YoY drop in Apple’s third largest region by revenue for six quarters in a row. Analysts had anticipated a reversal of the downward trend with revenue of $21.57 billion, representing a YoY increase of 3.6%.

Apple CEO Tim Cook noted significance of Apple Intelligence on an earnings call in January. Apple found the YoY performance on the iPhone 16 family in the markets that it had rolled out Apple intelligence was stronger than than markets it hadn't rolled out in, Cook said.

Cook told CNBC Apple is going through the regulatory process in China and “nothing is certain” until it gets through the process. He confirmed Apple is looking for local partners to offer AI services since OpenAI’s ChatGPT and other Western AI models aren’t available in China.