Apple Inc. and AI Partnerships in China

Investing.com — Apple Inc (NASDAQ:AAPL) is negotiating with Chinese internet giants Tencent Holdings Ltd (HK:0700) and Bytedance concerning the integration of their artificial intelligence models into devices sold in China, according to a Reuters report on Thursday.

The discussions between the companies are reported to be in the early stages. Earlier reports indicated that Apple was also in talks with Baidu Inc (NASDAQ:BIDU) for the use of its AI models, though those discussions faced hurdles due to technical issues.

Tencent’s flagship AI model is Hunyuan, while ByteDance offers Dubao, both recognized as some of the most advanced AI solutions available in China.

Apple is eager to find a local partner in order to introduce AI features on its devices. This AI integration, referred to as Apple Intelligence, was a significant selling point for Apple’s latest devices, particularly the iPhone 16 series.

Recently, the Cupertino-based tech giant launched ChatGPT-powered AI features on its iPhone models sold outside of China, enhancing functionalities for Siri and photo features.

However, ChatGPT isn't available in China due to governmental restrictions, and U.S. businesses are barred from sharing advanced AI technologies with Chinese firms.

Any Chinese partner collaborating with Apple is likely to gain significantly from the arrangement, given Apple's vast user base in the region.

Nonetheless, Apple has been gradually losing market share in China amidst intense competition from local brands like Xiaomi (OTC:XIACF) Corp (HK:1810) and Huawei. Additionally, Apple continues to lag behind competitors such as Samsung Electronics Co Ltd (KS:005930) in implementing AI features in its devices.