Key Insights:

• Apple explores partnerships with Baidu and ByteDance to meet China’s strict AI regulations and bring Apple Intelligence to Chinese consumers.
• Strict approval processes for AI models in China may delay Apple’s AI rollout until late 2025, pushing the company to rely on local partners.
• Competition from Huawei and declining sales add to Apple’s challenges in securing regulatory approval for its AI tools in China.

Apple is facing challenges in launching its artificial intelligence (AI) technology in China due to strict local regulations. A senior official at the Cyberspace Administration of China (CAC) has indicated that the approval process for foreign companies to run their own AI models in the country could be lengthy and complex. The official noted that partnering with local Chinese technology firms would be the most efficient path forward for Apple.

China has implemented strict regulations on companies offering generative AI services to the public, requiring approval through an official testing process. Apple is reportedly exploring collaboration opportunities with Chinese companies to meet these regulatory requirements and expand the availability of its AI tools, branded as Apple Intelligence, to Chinese users.

Apple Looks to Chinese Partners for AI Expansion

To comply with China’s regulatory framework, Apple has begun discussions with local companies. Sources familiar with the matter have revealed that Apple has held talks with Baidu, a leader in search and AI technology, as well as ByteDance and Moonshot, a start-up behind the Kimi AI chatbot. These potential partnerships would enable Apple to leverage existing, pre-approved large language models (LLMs) developed by Chinese firms.

According to the CAC official, foreign companies like Apple will find it “simpler and more straightforward” to use locally vetted LLMs than to develop and deploy their own models. By collaborating with Chinese partners, Apple could potentially reduce the time required to bring its AI services to market in China.

Challenges in Apple’s China Operations

China is Apple’s largest market outside the United States, accounting for 17% of its revenue for the fiscal year ending in September. However, Apple’s sales in the region have declined by 8% year-over-year. This downturn has been attributed to various factors, including increased competition from Huawei, which has integrated its own generative AI tools into its latest devices, and government-driven efforts to reduce iPhone use among state employees.

Apple CEO Tim Cook, who has visited China three times this year, emphasized the importance of bringing Apple Intelligence to Chinese consumers. During his visit to Beijing last month, Cook stated, 

“We are working hard to navigate the regulatory process, and we hope to introduce these features as soon as possible.”

While Apple has rolled out AI-powered features like Siri enhancements, writing aids, and photo editing in the United States, these tools remain unavailable on devices sold in China. If Apple cannot secure approval for its proprietary models, it may have to rely entirely on Chinese partners’ AI technologies to provide similar services.

Regulatory Uncertainty May Delay Rollout

Experts suggest that Apple’s rollout of its AI tools in China could be delayed until late 2025 or beyond due to the complexity of the regulatory process. Samik Chatterjee, an analyst at JPMorgan, stated that the approval process in China remains “opaque” for Apple and other international companies. He also noted that Apple is likely to take a “flexible” approach by pursuing partnerships with both large players like Baidu and smaller firms.

This strategy may improve Apple’s chances of obtaining the necessary approvals, but the timeline for launching its AI features in China remains uncertain. As Apple navigates these regulatory challenges, its competitors, including Huawei, may gain further ground in the local market by offering integrated generative AI services that are already approved for use.

Apple’s Push to Reinvent Through AI

Apple has made AI a core focus of its strategy this year, introducing a range of new features powered by its own language models. These tools aim to enhance user experiences and drive device upgrades. In the United States, Apple Intelligence combines on-device processing with cloud-based servers to deliver personalized AI capabilities, while tapping into models from OpenAI for more advanced queries.

The company’s efforts to replicate this approach in China underscore the importance of the market to its global strategy. However, without approval to use its proprietary models, Apple may face limitations in deploying these technologies on devices sold in China.

Apple declined to comment on its regulatory discussions or the timeline for its AI launch in China. Meanwhile, the company continues to work toward a solution that complies with local rules and meets the expectations of Chinese consumers.