by Song Jianan

Apple has officially partnered with Alibaba to localize AI services for iPhone users in China, Alibaba Chairman Joe Tsai confirmed at the World Governments Summit 2025 in Dubai on February 13, according to Yicai.

Speculation about the partnership had been circulating for months. The confirmation sent Alibaba’s Hong Kong-listed shares surging 9% to a three-year high of HK$121, pushing its market value to HK$2.3 trillion. Alibaba’s U.S. shares also saw gains, rising 0.24% in after-hours trading.

Alibaba’s AI division, Tongyi Qianwen (Qwen), has made significant strides in AI development. In January, it open-sourced its Qwen2.5-VL and Qwen2.5-1M models, enhancing visual and long-text comprehension. The flagship Qwen2.5-Max model was also upgraded, making Qwen one of the world’s largest open-source AI ecosystems, with over 90,000 derivative models globally.

Apple reportedly evaluated multiple Chinese AI providers, including Baidu, Tencent, ByteDance, and DeepSeek. While DeepSeek’s model was tested, Apple opted not to proceed. A potential deal with Baidu also fell through as Apple was unsatisfied with the model's progress. Ultimately, Alibaba emerged as Apple's AI partner in China.

Apple has been integrating AI into its ecosystem for years, from acquiring Siri in 2010 to launching bionic chips with AI acceleration capabilities in 2017. However, its Apple Intelligence AI suite, unveiled in June 2024, has yet to be rolled out in China.

Apple is under pressure in China, where iPhone sales plunged 25% in Q4 2024. In January 2025, Apple ranked fifth in China’s smartphone activations, trailing Huawei, Xiaomi, Vivo, and Oppo, and was the only brand in the top five with negative growth.

By teaming up with Alibaba, Apple seeks to enhance its AI capabilities in China—a crucial move in its effort to reclaim market share. Meanwhile, the collaboration strengthens Alibaba’s position in the AI race, intensifying competition in both AI and smartphone industries.