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The rise of local brands has challenged the iPhone maker’s market position, resulting in lower sales.
To comply with Chinese regulations, Apple is reportedly developing a censored version of its anticipated AI features for release in China mid-year in partnership with Alibaba, Baidu, and other local tech companies.
Bloomberg News reported that the Silicon Valley company has been trying to adapt its Apple Intelligence platform for the Chinese market, with a projected rollout as early as May.
Apple’s share price appreciated by approximately 2% on Thursday following the announcement of a strategic partnership with Alibaba concerning artificial intelligence.
The tech giant is reportedly enlisting the help of Alibaba and Baidu to ensure its AI models’ responses are filtered and aligned with Chinese censorship guidelines.
Despite its standing as Apple’s second-largest market worldwide, China has recently presented a challenge for the iPhone maker after the US, with sales figures indicating a downward trajectory. This decline in sales performance raises concerns about Apple’s ability to maintain its market share in this crucial region.
Apple experienced a significant decline in iPhone sales within the crucial Chinese market, with unit sales dropping from approximately 52 million in 2023 to 43 million in 2024. This represents a substantial decrease of roughly 9 million units, highlighting Apple’s challenges in maintaining its market share in China.
According to analysts, the decline in Apple’s iPhone sales can likely be attributed to the growing strength of domestic Chinese phone brands, as well as Apple’s slower pace in integrating AI technology into its products.
China’s development of the advanced DeepSeek AI model constitutes a notable competitive entry into the artificial intelligence market, specifically within the domain occupied by OpenAI’s ChatGPT.
While further research is needed, preliminary observations suggest a potential link between DeepSeek’s responses to user queries and narratives disseminated by the Chinese Communist Party (CCP). The extent and nature of this alignment warrant further investigation to determine whether it reflects deliberate design choices or other factors influencing the model’s output.
In consideration of recent developments in the field of artificial intelligence within China, Apple may need to implement modifications to its existing AI platform to ensure competitiveness within the Chinese market.
The Apple Intelligence platform in the United States currently integrates three distinct modalities of artificial intelligence: on-device processing, server-side processing, and using OpenAI tools within Apple’s infrastructure.
According to Bloomberg, the key difference between Apple’s AI in the US and China may be the addition of Alibaba software for censorship purposes, even if the underlying technology is the same.
For processing complex text rewriting requests arising from user queries, Apple Intelligence leverages a secure cloud computing infrastructure powered by Apple’s proprietary Mac chips.
Due to the complexities of the Chinese market, Apple’s cloud-based AI features may necessitate a collaboration with a Chinese partner company.
Apple’s compliance with Chinese regulations is not a new phenomenon. Last year, the company was compelled to remove Meta’s Threads app and WhatsApp, Telegram, and Signal from its App Store in China to meet government demands.
Apple emphasised its legal obligation: “We have no choice but to follow the laws where we do business, even if we don’t agree with them.”
The observed compliance of Apple with Chinese regulations is generally interpreted as a consequence of its significant dependence on the country for both manufacturing and sales activities.
