Apple’s attempts to deploy its AI technology in China have faced regulatory hurdles, underscoring the growing challenges foreign device makers face in one of the world’s largest telecommunications markets. The Cupertino-based company’s recent struggles highlight a changing landscape in which regulatory compliance increasingly requires collaboration with domestic AI providers.
THE situation This became particularly evident three months ago when Apple’s iPhone 16 launch in China failed to generate enthusiasm among consumers seeking advanced AI capabilities. The impact of the launch was further diminished by Huawei Technologies’ at the right time release of its AI-enabled device, which featured locally approved artificial intelligence features that Apple has yet to implement in the region.
Foreign device makers must submit LLMs used by AI features on phone hardware to local authorities for approval or face significant delays, according to senior officials at the Cyberspace Administration of China. The directive, highlighted at the recent World Internet Conference in Wuzhen, specifically indicated the use of large language models (LLMs) pre-approved by Chinese companies as a path to authorization.
Despite Apple CEO Tim Cook’s third visit to China this year, which included attending a CEO summit with Chinese Premier Li Qiang, the current situation demonstrates the severity of local regulatory challenges. The company has started exploratory discussions with Chinese tech giants, including Baidu, ByteDance and AI startup Moonshot, seeking partnerships that could facilitate the deployment of its AI features in the Chinese market.
Apple’s stakes are exceptionally high, which has weakened its negotiating position in China. Although China accounted for 17% of Apple’s total revenue last year, the company saw an 8% decline in regional sales amid growing competition from Huawei and other domestic suppliers. hardware and accompanying AI services.
Samik Chatterjee, an analyst at JP Morgan, predicts that without successful partnerships with local companies, regulatory uncertainty could delay the introduction of Apple Intelligence in China until at least the second half of 2025. This timeline threatens Apple’s competitive position Apple in a market where domestic manufacturers are rapidly developing their AI capabilities and already have regulatory approval for their offerings.
Apple’s current AI deployment strategy outside of China relies on on-device processing, private cloud computing servers and OpenAI’s ChatGPT for advanced queries. However, this approach faces significant hurdles in China, where regulators require all companies offering generative AI services to undergo rigorous formal testing of their models.
This situation reflects a broader trend in China’s telecommunications sector, where regulatory requirements increasingly favor domestic technology providers. Foreign device makers must now navigate a complex landscape where technical capabilities no longer guarantee market access.
The emphasis on local partnerships and the use of domestic AI models suggests a future in which success in the Chinese market may depend as much on regulatory compliance as technological innovation.
China’s regulatory framework (and increasingly that of the EU and Australia) poses challenges for companies like Apple, which generally maintains tight control over its ecosystem. The requirement to potentially integrate Chinese-developed LLMs represents a significant departure from the company’s usual product development and deployment strategies.
As the situation evolves, this is a crucial case study for other foreign device makers looking to deploy AI-based products in China. The outcome of Apple’s regulatory navigation could set important precedents for others seeking access to the world’s largest telecommunications market.
See also: Vivo leads, Apple falls: the changing face of China’s smartphone industry
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