The iPhone finally gets a major AI boost and is ready to fight back the sales slump

The iPhone took some major blows and suffered a lot in recent years, but now, as it seems, it's ready to take off to a brighter future with this latest AI upgrade.

When it comes to smartphones, it's either Apple or Samsung that people think of – generally speaking – when they think of smartphones. What many people (who don't keep a close look at the tech world) could be surprised to learn is that Apple has had some sales problems.

True, the iPhone 16 remains the top-selling smartphone in the world in 2024, according to some analyst firms, but the fact is that Apple is selling fewer and fewer units in the biggest phone market in the world (that's just another way of saying China).

Among other things, like Huawei's spectacular resurrection out of US-imposed sanctions – or Vivo's stellar performance lately, Apple is most likely having sales difficulties because of iPhones sold in China. Of course, there's the broader issue of Apple lagging behind the competition on the AI front in general, but that's not the point.

Apple has integrated OpenAI's ChatGPT into its devices through Apple Intelligence. However, ChatGPT is not accessible in China, where generative AI services require government approval. And people over there want their AI. Hence, the iPhone 16 – not packing cutting-edge AI – has no chance of competing with rivals overseas.

To comply with regulations and address its shrinking market share in the region, Apple is cautiously seeking partnerships with local companies.

And that's just what Apple has been doing – and now it seems that it has found the partnership it has been looking for.

A new dawn

Apple is partnering with Alibaba to bring AI-powered features to iPhones in China. The collaboration's goal, confirmed by Alibaba Chairman Joe Tsai at the World Governments Summit in Dubai, is to regain lost ground in a market where it has struggled against fierce domestic competition.

As mentioned above, the absence of advanced AI capabilities in its devices has been cited as a key factor for its sales problems, especially as competitors like Huawei have incorporated AI-powered features into their smartphones.

The impact was particularly evident in 2024 when Apple lost its position as China's top smartphone vendor. Market research info from Canalys showed that Apple’s shipments in China dropped by 17%, allowing Vivo and Huawei to take the top two spots, relegating Apple to third place.

Initially, Apple had considered Baidu as its primary AI partner, but the Chinese firm’s models reportedly failed to meet Apple's standards. Then, Apple explored partnerships with Tencent, ByteDance, and DeepSeek before ultimately selecting Alibaba.

The integration of Alibaba’s AI models is expected to enhance the iPhone experience by leveraging Alibaba's vast troves of user data from its e-commerce and payment platforms. This could enable more personalized and efficient AI-driven services, helping Apple close the gap with its Chinese rivals.

Meanwhile, competition in China's AI sector continues to intensify. Baidu announced that its AI chatbot, Ernie Bot, will be available for free starting in April, a move likely aimed at boosting adoption in an increasingly crowded market.