Data on the use of AI smartphones in China indicates a significant challenge for Apple as it prepares to launch its AI platform, Apple Intelligence, in the region. The longer the launch is delayed, the more the tech giant is at risk of losing market share in a highly-competitive market. Currently, Huawei and Xiaomi dominate the AI smartphone market in China, commanding a combined market share of 61.7%, dwarfing Vivo, the next major player in the market with a share of 11.6%.
Surprisingly, Apple is not present in the data. Although the company unveiled its Apple Intelligence AI platform in June, and further elaborated on it with the iPhone 16 series in September, the first official release did not occur until iOS 18.1. Moreover, not all regions have access to the basic features of Apple Intelligence, including China, where the company faces regulatory hurdles.
In order to launch generative AI products in China, Apple needs government approval and must provide substantial information on the workings of its AI, including its training systems and security assessments. Another obstacle is that Apple Intelligence utilizes contributions from ChatGPT, and OpenAI has restricted access to its software from China.
This poses a dilemma for Apple: either forfeit its most significant overseas market or develop a censored version of its AI assistant, as reported in a study on the impact of this on Apple’s business in China. The market share data clearly indicates that competitors are leveraging AI to boost sales, and there is a strong demand for this functionality among consumers.
“Chinese buyers anticipate their high-end phones to have the latest AI features and may be reluctant to spend over $1,000 on devices that lack these advanced AI capabilities,” IDC informed CNN Business. The report also highlighted that Samsung has partnered with Baidu and Meitu for some of its Galaxy AI functionality, a route Apple may also need to consider to comply with the stringent AI regulations in China.
In late October, Apple CEO Tim Cook visited China and met with the head of the Ministry of Industry and Information Technology, but it remains unclear if the launch of Apple Intelligence in China was discussed. Despite these challenges, Apple maintains the second spot in the Chinese market, with the performance of the iPhone 16 akin to the iPhone 15, as per research from IDC. Nonetheless, the report revealed a general decline for Apple over the last year, whereas Huawei, Xiaomi, and market leader Vivo all exhibited considerable growth. However Apple chooses to address its AI dilemma in China, it needs to act promptly.
