China has traditionally been a tough tech market to crack, especially for tech majors from the U.S. While local competition is fierce, political and regulatory environment doesn’t help either. However Apple is one company that has consistently been able to thrive in China, by finding a balance between China’s strict regulations and its own core of focusing on user privacy. And it is now looking to crack yet another Chinese tech market — a big one at that, using the very same balance. It is in the field of AI.
Apple is in talks with Chinese multinational tech conglomerate Tencent and TikTok owner ByteDance to roll out AI features, according to a Reuters report citing sources familiar with the matter. This comes at a time when Apple is witnessing a constant decline in China market share, losing out to local rivals such as Huawei, Xiaomi and others. On the flip side, ByteDance-owned, immensely popular video-sharing app TikTok is inches away from being banned in the US, finally turning to the U.S. Supreme Court for an intervention to avert the ban.
Apple is looking to collaborate with regional tech giants to leverage locally available AI models, as right now the lack of AI features in iPhones sold in China has become a major challenge for the company. Notably, the iPhone maker began integrating OpenAI’s ChatGPT into its devices this month as part of its Apple Intelligence product, allowing Siri to leverage the chatbot’s expertise to answer user queries on photos, documents, and presentations. However, as previously mentioned, ChatGPT is unavailable in China due to strict regulatory requirements, which demand government approval for generative AI services before they can be publicly released. And that is why Apple is trying to join hands with local partners to implement its AI features.
Even by not providing easy entry to overseas players, China still remains at the forefront of the AI wave, with multiple large language models launched by both major tech firms and startups, including ByteDance’s Doubao, Tencent’s Hunyuan, and Baidu’s Ernie. Given these circumstances, Apple is rushing to enable its AI capabilities in China.
Meanwhile, Apple’s revenue in China dropped to $15.03 billion for the quarter ending in September, compared to $15.08 billion a year earlier. The company’s annual revenue from the country also fell by 7.7%, totaling $66.95 billion. On the other hand, global sales rose by 6.1%, amounting to $94.9 billion for the same period. This dip in China is mainly due to the pending approval of Apple’s artificial intelligence (AI) expansion by Chinese authorities. In fact, the fresh IDC data shows that Apple experienced a 0.3% decline in smartphone sales in China during the third quarter, whereas Huawei’s sales surged by 42%.
