Key Takeaways:
China approved 7 on-device generative AI services including Apple Intelligence and Samsung Galaxy AI, with Baidu confirmed as the AI partner for both smartphone giants to navigate local compliance requirements.
China's Cyberspace Administration approved 7 new on-device generative AI services including Apple Intelligence and Samsung Galaxy AI, with Baidu tapped as the AI partner for both smartphone makers to navigate local compliance requirements, people familiar with the matter said.
"Baidu's ERNIE model provides the foundational AI capabilities that global smartphone brands need to serve Chinese users under local regulations," a person familiar with the partnerships said, asking not to be named because the details are private.
Baidu will support Apple in developing AI-powered search functions that handle images and text, as well as a China-specific version of the Siri voice assistant, according to a person familiar with Apple's plans. For Samsung, the ERNIE large model powers Galaxy AI features including Circle to Search and Notes Assistant, while Samsung's Bixby voice assistant also integrates Baidu's AI search capabilities. Alibaba's Qwen model will also be integrated into Apple Intelligence across iOS, iPadOS, macOS and visionOS in China, Alibaba said in a statement.
The approvals remove a regulatory overhang for Apple and Samsung in China, the world's largest smartphone market where both companies have faced declining sales amid competition from domestic rivals like Huawei and Xiaomi. For Baidu, the dual partnership validates its ERNIE model's competitiveness against Alibaba's Qwen and could drive meaningful AI services revenue as millions of iPhone and Galaxy users access generative AI features powered by its technology.
What the partnerships mean for the AI landscape
China requires companies to register large language models and generative AI services with regulators before making them available to the public, a framework established in 2023. Apple Intelligence's registration clears a major hurdle for the company's AI rollout in China, where it had been absent from the initial wave of AI smartphone features launched by domestic competitors.
Baidu's role as the AI backbone for both Apple and Samsung positions the company as a gatekeeper for Western smartphone AI in China. The company's ERNIE model competes directly with Alibaba's Qwen, which will also power parts of Apple Intelligence. Tencent's Hunyuan and ByteDance's Doubao are other major domestic models that have secured regulatory approval.
Investment implications
Apple trades at about 30 times forward earnings, with China accounting for roughly 17% of its total revenue. The AI feature rollout could help stabilize iPhone demand in the region, where the company lost market share to Huawei in the premium segment last year. Samsung, which holds about 1% of the China smartphone market, is unlikely to see a significant share gain from the AI features alone, analysts at Counterpoint Research have said. Baidu's AI cloud revenue reached 2.1 billion yuan ($290 million) in the fourth quarter of 2024, up 18% year over year, and the smartphone partnerships could accelerate that growth.
This article is for informational purposes only and does not constitute investment advice.
