Apple Inc. partnered with Alibaba to bring artificial intelligence (AI) features to the iPhone, ignoring US lawmakers’ call to stop all AI partnerships between American and Chinese companies.
Apple’s share price increased to US$241.5 on Thursday, up 6.4% from Tuesday, when The Information first reported the news. Alibaba’s Hong Kong-listed shares have surged 18% to HK$124.1 (US$15.9) from Tuesday to Friday.
Last year, Apple sold 42.9 million iPhones in China, down 17% from 2024. The company ranked No.3 in the Chinese smartphone market, following Vivo and Huawei. In the fiscal year ending September 30, 2024, Apple generated about 17% of its revenue from China.
“Apple has always been picky. They had discussions with several companies in China and finally decided to partner with us,” Alibaba Chairman Joe Tsai told reporters when attending the World Governments Summit in Dubai. “They want to use our AI technology to power their phones.”
Apple Intelligence
In June, Apple announced it would launch Apple Intelligence, an AI-powered personal intelligence system for its iPhone, iPad, and Mac.
It said the new feature would allow Apple chips to understand and create language and images, take action across apps, and draw from personal context to simplify and accelerate everyday tasks.
In October, users of the latest Apple devices – including all iPhone 16 models and the iPhone 15 Pro and Pro Max, were able to start using Apple Intelligence to rewrite their messages and emails, prioritize their notifications and edit pictures.
For AI tasks requiring large computational powers, users can use Apple Intelligence on their devices or Apple’s Private Cloud Compute system.
According to The Information, Apple had previously planned to work with Baidu but found that the Chinese search engine’s AI models were not quite what it wanted.
The report said Apple had little choice in finding a Chinese partner to get its AI tools approved by regulators.
iPhone users in China are expected to be able to use Apple’s AI tools from around May.
Alibaba’s chatbot
It’s unclear whether Apple will have to share AI data or technology with Alibaba or whether iPhones for sale in China will include Alibaba’s AI chatbot Tongyi Qianwen or Qwen.
In May last year, Alibaba launched Qwen2.5, which has 500 million to 110 billion parameters. More parameters often lead to more powerful models.
OpenAI’s ChatGPT3 has about 175 billion parameters, while ChatGPT4 has about 1.8 trillion parameters. The architecture of ChatGPT4 consists of eight models, each of which has 220 billion parameters.
On January 28 this year, Alibaba unveiled Qwen2.5-Max, which claims to have been trained on over 20 trillion parameters. It said Qwen2.5-Max performs much better than DeepSeek.
It would be no surprise if Qwen2.5 can perform better than DeepSeek. DeepSeek’s developers said in a research paper on January 22 that they had “distilled” data from Qwen2.5 when training their AI models.
In the process of “knowledge distillation,” DeepSeek is a student who keeps asking questions to a knowledgeable teacher, such as ChatGPT or Qwen2.5, and uses the answers to fine-tune its logic.
In this case, Qwen2.5 is a teacher trained by Alibaba with significant computing powers and data while DeepSeek is just a student, or a distill version of other AI models.
Zhou Chang, an algorithm engineer at Alibaba and the person in charge of the Qwen2.5 AI model, left Alibaba last July, taking along a team of about 10 engineers to join ByteDance.
Media reports said Zhou’s annual salary at Alibaba was about 2 million yuan (US$275,691). Zhou was offered a package of at least 10 million yuan from ByteDance. But Alibaba reportedly filed a lawsuit against him claiming he wasn’t entitled to join a competitor.
US restrictions
Last October, the Biden administration finaliszd a set of rules that aim to forbid US investments in certain national security technologies and products in mainland China, Hong Kong and Macau.
The rules, effective on January 2 this year, cover China’s AI, Quantum and semiconductor sectors.
On January 29, Josh Hawley, a Republican Senator, introduced a bill titled “Decoupling America’s Artificial Intelligence Capabilities from China Act of 2025,” calling for prohibitions on the import and export of AI or generative AI technology or intellectual property.
If passed by the US Congress, the Act might forbid people from “importing” iPhones powered by Chinese AI technologies. However, whether and when this bill will be passed is still a question.
Yong Jian is a contributor to the Asia Times. He is a Chinese journalist who specializes in Chinese technology, economy and politics.
Read: Trump skeptical of calls for a complete DeepSeek ban
