Apple is in talks with Tencent and ByteDance, the owner of TikTok, about integrating their artificial intelligence models into iPhones sold in China, according to three sources familiar with the matter. This month, Apple began rolling out OpenAI’s ChatGPT into its devices as part of the Apple Intelligence product, which allows its Siri voice assistant to utilize the chatbot’s expertise, including answering user queries about photos and documents such as presentations. However, ChatGPT is not available in China, and the country’s regulatory requirements mandate that generative AI services obtain government approval before they can be publicly released. This has forced Apple to seek local partners for its AI features, especially as its market share in China is declining.
The discussions between Apple, Tencent, and ByteDance regarding the use of their AI models are still at a very early stage, sources say, and they requested anonymity as the talks are not public. ByteDance declined to comment, while Apple and Tencent did not immediately respond to requests for comment. A successful partnership for Apple’s AI services in China could lead to significant gains in an increasingly competitive AI market, where many large language models have been launched by both major tech firms and startups.
Some of these models include ByteDance’s Doubao, Tencent’s Hunyuan, and Baidu’s Ernie. Reports indicate that Apple and Baidu have also been in talks about using Baidu’s AI model in China, but these discussions have faced setbacks due to technical issues, including disagreements over the use of iPhone user data for training the AI models. Baidu did not respond immediately to a request for comment. The lack of AI capabilities in the latest iPhones sold in China has become a significant disadvantage for Apple, which is experiencing a decline in market share in the world’s largest smartphone market due to increased competition from domestic brands, notably Huawei.
Huawei recently returned to the high-end market with a phone featuring a Chinese-made chip and launched its Mate 70 series last month, which includes AI capabilities powered by its proprietary large language model.
In the second quarter, Apple briefly fell out of China’s top five smartphone vendors but managed to recover in the third quarter. Nevertheless, the company’s smartphone sales in China slipped by 0.3% in the third quarter compared to the previous year, while Huawei’s sales surged by 42%, according to research firm IDC.