Apple’s plan to integrate advanced AI features into iPhones to maintain market dominance is hitting roadblocks in China, its second-largest market, due to escalating U.S.-China tensions. The tech giant’s potential partnership with Alibaba to deploy AI capabilities on iPhones in China is under intense scrutiny from Washington, where officials fear it could bolster Chinese AI development, enhance censored chatbots, and entangle Apple in Beijing’s strict data and censorship laws. This follows previous U.S. pressure that led Apple to abandon a deal with a Chinese chip supplier in 2022 and recent tariffs on Chinese-made iPhones threatening Apple’s profits.
The White House and congressional officials, including the House Select Committee on China, have questioned Apple executives about the Alibaba deal’s terms, data-sharing arrangements, and compliance with Chinese regulations. Apple’s inability to provide clear answers during a March meeting heightened concerns. Lawmakers worry that such partnerships could enable Chinese firms like Alibaba to refine AI models using user data, potentially aiding China’s military capabilities in a future conflict. Some U.S. officials are even considering adding Alibaba to a blacklist to curb U.S.-China tech collaboration.
Apple’s AI push, branded as Apple Intelligence, aims to enhance iPhone functionality with features like improved Siri, notification summaries, and writing tools. While Apple partnered with OpenAI for U.S. markets, OpenAI’s absence in China prompted the Alibaba deal. However, without this partnership, Apple risks falling behind Chinese competitors like Huawei and Xiaomi, who offer AI-ready smartphones. The deal’s collapse could also impact Apple’s market share in China, where iPhone sales dropped from 19% in 2023 to 15% last year, especially since Alibaba’s e-commerce platform could boost iPhone marketing.
Adding to Apple’s challenges, President Trump recently criticized CEO Tim Cook for manufacturing in India instead of the U.S., signaling further pressure. As Apple navigates these geopolitical and regulatory hurdles, its ability to deliver cutting-edge AI features in China hangs in the balance, potentially reshaping its competitive edge in a critical market.