Apple Intelligence seems to have a ChatGPT-shaped problem in China

Apple Intelligence at WWDC 2024. Apple

• Apple is betting its future on Apple Intelligence.
• The new suite of AI features are expected to breathe fresh life into iPhones.
• Apple may have a problem offering these services in China, its second-biggest iPhone market.

If there's one place Tim Cook could do with Apple Intelligence being a real hit, it's China.

Apple's spin on generative AI, revealed at WWDC this month, is set to bring Silicon Valley's most-hyped technology to its devices at a time when they could do with a killer new feature to entice Chinese consumers.

That's because Apple has been in urgent need of a plan to rejuvenate interest in iPhones in China — its most important international market — where sales were down by almost a fifth in the first three months of the year, according to one estimate.

Apple's decline in China has been triggered by a number of factors.

For one, Chinese consumers have had a conveyor belt of enticing alternatives — such as the Mate 60 Pro and Pura 70 Ultra — showcased to them by domestic players such as Huawei in recent months. They're likely to have grown tired of iterative iPhone upgrades in recent years, too.

Luckily for the iPhone maker, interest in Apple Intelligence has been strong. A combination of its own AI and a new partnership with ChatGPT maker OpenAI has offered investors enough assurance to drive an $200 billion-plus rally in Apple stock.

There's just one problem: Apple doesn't have a clear way of getting all these new AI features everyone's excited about up and running in China.

Getting Apple Intelligence to China

Apple CEO Tim Cook. Justin Sullivan/Getty Images

Keeping a strong foothold in China is vital for Apple. In its last fiscal year, the company generated $72.6 billion in net sales from the Greater China region.

However, with signs of that sliding, Apple has reason to get Apple Intelligence into the country.

CEO Tim Cook has put the new suite of AI features front and center in Apple's future, promising they "will transform what users can do with our products — and what our products can do for our users."

The problem is that a key part of Apple Intelligence — ChatGPT —isn't actually allowed in China right now. Chinese citizens must use a VPN to gain access to the OpenAI chatbot.

ChatGPT has not made its way into the country because companies seeking to offer large language model-led AI chatbots must first get approval from Beijing. Such approval has only been offered to Chinese developers of AI chatbots thus far.

According to The Wall Street Journal, this has led Apple to conversations with leading local companies such as Baidu, Alibaba, and Beijing startup Baichuan AI about striking an agreement to mirror its OpenAI deal.

It's worth noting that ChatGPT does not play a central role in Apple's AI rollout.

Laggard risk

OpenAI's chatbot will be available on upgrades coming to Apple's iPhone, iPad, and Mac operating systems later this year. Users will be able to opt into having it appear as a virtual assistant on their devices and power Siri. The rest of it is driven by Apple's own AI.

Still, the OpenAI partnership is an important one for Apple as its rivals in China have already introduced smartphones with AI features.

With no means of introducing Chinese users of its devices to ChatGPT, Apple risks being seen as a laggard on the most-talked about technology of the moment.

Apple will want to find a partner in China as fast as it can.

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