Apple’s AI is causing the company big problems, data shows

Information on AI smartphone use from China has shown the significant battle Apple will have on its hands when (if?) Apple Intelligence eventually launches there, and how longer delays will see it lose market share in a fiercely competitive space. Huawei currently controls 34.8% of the AI smartphone market in China, while Xiaomi has 26.9% according to new data, giving the mobile giants a massive 61.7% share together, dwarfing the next player in the space, Vivo, with 11.6%.

Apple is nowhere to be seen in the data. The company announced its Apple Intelligence AI platform in June, and detailed it further with the iPhone 16 series in September, but the first official release didn’t arrive until iOS 18.1. Even now, some features are still only available in beta releases, and not all regions even have access to Apple Intelligence’s basic features. This includes China, where Apple faces regulatory problems.

To release generative AI products in China, Apple requires government approval, and it must apparently provide a large amount of information on how its AI works to get it, from how its systems are trained to passing security assessments. Apple Intelligence uses contributions from ChatGPT, and OpenAI has blocked access to its software from China, creating further issues.

“For Apple, this means either walking away from its largest overseas market or creating a separate, censored version of its AI assistant,” it’s claimed in a report on how this may affect Apple’s business in China. It’s clear from the market share data its competitions are using AI as a way to drive sales, and it’s apparent buyers are looking for the functionality too.

“Chinese consumers are expecting their premium phones to have the latest AI functionality and may hesitate to spend over $1,000 for devices that don’t have all the AI bells and whistles,” IDC told CNN Business. In the same report, it’s noted Samsung has partnered with Baidu and Meitu for some of its Galaxy AI functionality, a path Apple may also be considering as a way to meet the extensive regulation on AI in China.

At the end of October, Apple CEO Tim Cook visited China and met with the head of the Ministry of Industry and Information Technology, but it’s not certain if the release of Apple Intelligence in China was discussed. Apple still holds the second spot in the Chinese market, with the iPhone 16 performing similarly to the iPhone 15, according to research from IDC. However, more concerningly, the report showed an overall decline for Apple over last year, when Huawei, Xiaomi, and market leader Vivo all showed considerable improvement. However Apple plans to solve its Apple Intelligence problem in China, it likely needs to happen soon.