Alibaba’s chair has said it will provide technology for Apple’s artificial intelligence-capable iPhone models sold in China, confirming reports of a high-profile partnership that has fuelled a rally in the Chinese group’s shares.
“Apple has been very selective. They talked to a number of companies in China and in the end they chose to do business with us,” Joe Tsai said at a conference in Dubai on Thursday.
“They want to use our AI to power their phones, so we’re very fortunate and extremely honoured to be able to do business with a great company like Apple,” he said.
The Californian company has been working to reinvent itself around AI, betting that consumers will upgrade smartphones to access powerful new features that will not work on older models. But Apple has faced major obstacles to rolling out such capabilities in China, where any large language model offered to the public needs to undergo a rigorous testing and approval process by the authorities.
A top Chinese regulator last year indicated to the Financial Times that Apple needed to partner with a Chinese company to navigate the approval process more easily.
Apple tested models and discussed partnerships with many of China’s leading AI players, including Baidu, ByteDance, Moonshot, Zhipu and Tencent, according to people familiar with the matter. DeepSeek’s models were also tested, according to one person. China’s cyber security watchdog has approved more than 300 domestic AI models for use so far.
Tsai said that Apple was able to do AI partnerships with other companies outside China, “but inside China, because of regulatory issues and things like that, they need to work with Chinese companies that develop AI”.
“I think that is going to be the case wherever you do business in the future; you may want to have a localised AI that powers your devices,” he added.
Though Tsai said Apple chose Alibaba after discussions with many potential suitors, it remains unclear if their deal amounts to an exclusive partnership. People familiar with Apple’s plans for China have said the US company was considering using multiple Chinese AI models.
Apple’s Chinese rivals have aggressively rolled out AI features on smartphones, leaving the iPhone maker at a disadvantage. Its China business has also been hit by rising geopolitical tensions, which have caused a wide swath of state employees to ditch its handsets.
In Apple’s most recent financial quarter, sales in the key market dropped 11 per cent from a year earlier to $18.5bn, or 15 per cent of total revenue.
Hong Kong-listed shares of Alibaba have risen more than 40 per cent from the start of this year. They initially gained ground after it released a new version of its AI model Qwen 2.5 following the launch of DeepSeek’s newest model, which stunned global markets earlier this year with its capabilities and low development costs.
Alibaba declined to comment. Apple did not immediately respond to a request for comment.
