Apple teams up with Alibaba to bring AI features for iPhones in China, The Information reports

Apple is partnering with Alibaba to roll out artificial intelligence features for iPhone users in China, the Information reported on Tuesday, citing one person with direct knowledge of the decision.

The development could clear months of uncertainty over Apple's AI strategy for China, where it has been losing market share to domestic rivals, including a resurgent Huawei whose smartphones have included AI tools since last year.

Apple stock rose 1.5% in early trading, while US-listed shares of Alibaba gained 2.6%.

Apple had selected Baidu as its main partner last year, but the Chinese company's progress in developing models for Apple Intelligence fell short of its standards, the report said.

After that, Apple considered models developed by Tencent, TikTok-parent ByteDance, Alibaba and Deepseek, but it passed on Deepseek as the startup's team lacked the manpower and experience needed to support a large customer, the report said.

Apple and Alibaba did not immediately respond to Reuters requests for comment.

The companies have submitted the Chinese AI features they co-developed for approval by China's cyberspace regulator, the report said.

Rolling out the tools is crucial as iPhone sales dipped in the holiday quarter - usually Apple's biggest period of sales - due to a lack of AI features that were meant to be the chief selling point of its latest devices.

The company has forecast strong sales growth in the current quarter, fanning hopes that iPhone demand will rebound.

The Information said Apple's decision to go with Alibaba was partly driven by the vast troves of personal data the e-commerce giant has on users' shopping and payment habits, which could help it train models and deliver more customized services.