Apple trains China AI model with Alibaba, partner shares up 4%

Apple has trained a large language model tailored to China with Alibaba's support, giving the iPhone maker direct control over AI features in a market where U.S. models from OpenAI and Anthropic are blocked.

"They talked to a number of companies in China. In the end they chose to do business with us," Joe Tsai, chairman of Alibaba, said at the World Governments Summit in Dubai in February 2025, when the partnership was first confirmed.

The model was developed with Alibaba's support, three people familiar with the matter said, declining to be named because the information is not public. Apple Intelligence, the company's suite of AI tools, is expected to launch in China in the coming months after an update to its iOS operating system. Under the arrangement, Alibaba's Qwen model will be incorporated into the version of Apple Intelligence shipping with compatible iPhone, iPad, Mac and Vision Pro models in China, with technology from Baidu also included, Reuters reported in July. Alibaba's U.S.-listed shares climbed about 4 percent in premarket trading on news of the July registration.

The dual-track strategy makes Apple the first foreign company approved by Beijing to offer a proprietary AI model in China, a rare collaboration between U.S. and Chinese tech firms as trade tensions over AI widen. China accounts for a significant share of Apple's revenue, and the absence of AI features on Chinese iPhones has weighed on sales as consumers turned to domestic brands such as Huawei with built-in AI assistants. Apple's own model, trained with Alibaba's support, would sit alongside the Qwen and Baidu technology already cleared for its devices, giving the company a hedge against dependence on any single Chinese partner.

Regulatory clearance, but questions remain

The move follows a lengthy regulatory process that ended last month, when the Cyberspace Administration of China, the country's internet watchdog, registered Apple's generative AI service, clearing the way for Apple Intelligence to reach Chinese iPhones for the first time. The registration capped months of adaptation as Apple worked to tailor its features to Chinese rules, a process that delayed the rollout after the partnership was announced in early 2025. Last week, Apple published a Chinese-language guide explaining how eligible Mac users in mainland China could connect Qwen to its Siri digital assistant and Writing Tools feature, a Mac-specific arrangement that could help it compete in China's AI PC market. Apple has since deleted the guide without providing an explanation.

What it means for investors

It was not immediately clear what role Apple's self-trained model would play alongside third-party Chinese models and how those would work together. For Alibaba, securing Apple as a client confirms its AI capabilities and could drive demand for its cloud and AI services, a confirmation that investors have already begun to price in. Alibaba's U.S.-listed shares, which rose about 4 percent on the July registration news, reflect expectations that the tie-up could reshape China's AI market. The China rollout could support iPhone demand in a market where Apple has ceded share to Huawei and other domestic rivals that raced ahead with AI-equipped handsets, giving the company a path to recover lost ground in its most important overseas market.

This article is for informational purposes only and does not constitute investment advice.