Apple faces AI hurdles in Chinese market

Apple is encountering significant challenges in implementing artificial intelligence capabilities for iPhones in China, according to tech publication The Information. The company is working with Chinese tech giant Baidu to adapt its AI models, but the collaboration faces multiple obstacles, particularly regarding prompt understanding and response accuracy.

While Apple utilizes OpenAI's technology in other markets, U.S.-based AI systems are not available in China, forcing the company to rely on local alternatives. The partnership with Baidu, which aims to integrate AI features into iPhones, Macs, and iPads sold in China next year, is experiencing friction over data collection and usage policies. Baidu seeks to retain and analyze iPhone user data for AI training, but this conflicts with Apple's strict privacy standards.

The project employs Baidu's most advanced model, Ernie 4.0, and includes plans to enhance Siri's capabilities, particularly in search functionality. Baidu, which has been Apple's default search engine provider in China since 2012, is investing in additional cloud computing resources and chips to handle the anticipated increase in user requests.

These AI-related challenges come at a crucial time for Apple in the Chinese market, where it recently experienced a 0.3% decline in phone sales during the third quarter, while local competitor Huawei saw a 42% increase. The company's latest iPhone 16 release already faced criticism in China for lacking advanced AI features.

Despite Apple's financial commitment to the project, including paying for Baidu's AI models and training costs, there's uncertainty about whether the addition of generative AI capabilities will successfully boost iPhone sales in the challenging Chinese market.