Apple is preparing to integrate new AI features into its iPhones to boost sales, particularly in China where demand has been sluggish. However, a significant hurdle has emerged: ChatGPT, which Apple plans to integrate into Siri, is banned in China.
Earlier this month, Apple showcased its proprietary technology called Apple Intelligence and announced a partnership with OpenAI to incorporate ChatGPT in a limited capacity. When Siri needs additional assistance, ChatGPT can step in to provide answers. This move aims to keep Apple competitive with tech giants like Microsoft, Google, Meta, and Samsung, who have already advanced in AI technology.
However, China, one of the first countries to regulate generative AI, poses a challenge for Apple. The Cyberspace Administration of China, the top internet watchdog, introduced new guidelines in August requiring companies to seek approval before deploying AI technologies. To date, over 100 AI models from Chinese companies have been approved.
Search for a Chinese Partner
According to the Wall Street Journal, Apple is actively seeking a partnership with a Chinese AI company ahead of the iPhone’s expected September launch but has not yet secured a deal. Apple did not respond to requests for comment.
This urgency comes at a time when Apple’s smartphone sales fell by 10% in the first quarter of this year, largely due to a significant drop in iPhone sales in China. Nationalism, economic difficulties, and increased competition have also hurt Apple’s sales in its second-largest market.
Troubles in the European Union
Apple’s AI feature rollout faces challenges beyond China. Regulatory hurdles in the European Union (EU) have also posed a problem. The Digital Markets Act (DMA) has introduced uncertainties, prompting Apple to delay the rollout of three features—iPhone Mirroring, SharePlay Screen Sharing enhancements, and Apple Intelligence—in the EU this year. Apple expressed concerns that the interoperability requirements of the DMA could compromise product integrity, user privacy, and data security. Apple stated it is working with the European Commission to find a solution.
Rising Competition in China
In China, Apple’s challenges are compounded by the rapid growth of local competitors. Huawei’s smartphone sales grew by 70% in the first quarter, according to Counterpoint Research. Nabila Popal, a senior director at IDC Research, emphasized that Apple needs a local AI partner to meet Chinese consumers’ expectations for premium phones with the latest AI functionalities.
“The real growth in China for Apple will come in the long term, as Apple Intelligence evolves offering more use cases, extends language support beyond English, and when Siri can leverage other local AI models to provide the ChatGPT-like function,” Popal said.
Some Chinese AI companies may be better suited to target local consumers by offering more local dialects than what foreign AI models currently provide, noted Reece Hayden, an analyst at ABI Research.
Potential Partnerships and Outlook
Apple is not the first foreign company to navigate China’s AI regulations. Samsung, for instance, has partnered with Chinese tech giant Baidu for translation services and works with Meitu for photo editing tools. In China, Samsung uses local AI technologies, while it uses its proprietary AI and Google’s AI model Gemini elsewhere.
Despite the tight timeline, Jeff Fieldhack, a research director at Counterpoint, believes Apple will secure a partnership in time for its fall software launch. He pointed out that Apple’s strong global install base makes it an attractive partner for Chinese AI companies, potentially establishing them as AI power players in the country.
With these efforts, Apple aims to regain momentum in China, a critical market for its long-term growth and success.