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The deployment of artificial intelligence services in China with Alibaba has been supported by Beijing regulators as the technology partnership will become the latest casualty of Donald Trump’s trade war.
The High-Tech Giants have been working together to launch Apple Intelligence, the suite of AI services from iPhone manufacturers for Chinese users. This system is supported by the latest models from Alibaba.
Several AI products, jointly developed by high-tech companies, have been submitted to the Internet Bureau in China for approval this year.
But their applications are stagnant in China’s Cyberspace Management (CAC), and the two familiar with the issue said they cited an increase in geopolitical uncertainty between China and the US.
Apple has been struggling with growing tensions, particularly between Washington and Beijing, despite the CEO’s efforts to gain favor with the White House ahead of Trump’s second term.
The US President has put pressure on Apple, which has grown into one of the world’s most valuable companies, driven by its manufacturing operations in China and regained production in the United States.
Last month, Trump threatened Apple and Samsung with 25% tariffs on devices unless companies resend manufacturing.
Apple’s stock price was another hit this year thanks to the slow global development of AI features. It is touted as a key selling point for the latest iPhone models, and implements regulatory and legal action that threatens the margin service business.
The delay in the release of Apple Intelligence in China is operating the US company as it faces increased competition with Chinese rivals led by Huawei, Xiaomi, Oppo and Vivo.
The delay in Apple’s partnership with Alibaba is due to the two world’s largest economies, the US and China, engaged in negotiations to reduce TIT tariffs, which have skyrocketed to 145%.
Typically, a CAC approval process with formal testing of AI models is required for all companies seeking to provide popular AI services in China. CAC has approved over 300 domestic AI models for use so far.
Despite Apple’s partnership with Alibaba to win CAC approval, the well-known relationship still attracts regulatory scrutiny as trade tensions with the US escalate.
Beijing is also seeking leverage in trade talks by reviving research from US technology giants such as Nvidia and Google.
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One person with knowledge of the Apple-Alibaba partnership said it took Beijing to consider US-related transactions and partnerships, particularly in key areas such as AI.
The final approval must be cleared by a higher body of the National Council, which is also engaged in trade negotiations between the US and China.
However, the person added that all such delays are subject to change and that applications could be reviewed promptly after the state legislature has granted approval.
Others familiar with the debate say that the U.S. Department of Commerce’s Industrial and Security Bureau also expressed concern about their partnership with Apple and Alibaba, but there is no legal action to block it.
Alibaba Chairman Joe Tsai said in February that the company would confirm a report on a partnership that provided Apple’s AI-enabled iPhone models with technology sold in China and facilitated a gathering of Chinese group’s stocks.
Meanwhile, Apple’s market share is declining in China. At the beginning of 2023, Apple took a 70% share in the Chinese high-end smartphone market, while Huawei was 13%. By the first quarter of this year, Apple’s share had fallen to 47%, with Huawei at 35%.
Apple declined to comment. Alibaba, the CAC and the National Council of China did not respond to requests for comment.
