Alibaba's Qwen AI to power Apple Intelligence in China, shares up 5%

Alibaba Group Holding Ltd. confirmed Wednesday that its Qwen AI model will be integrated into Apple Inc.'s Apple Intelligence suite for users in China, ending a more than year-long regulatory wait and sending its U.S.-listed shares up 4.78% to $117.69.

"Qwen will be integrated into Apple Intelligence experiences within iOS, iPadOS, macOS, and visionOS for users in China," an Alibaba spokesperson told CNBC, adding that users will be able to access text and image understanding and generation capabilities without switching between tools.

China's Cyberspace Administration approved Apple's AI services on a list that also included products from Huawei and other domestic companies, Reuters reported. The deal, first reported in February 2025, required Beijing's content filtering and security evaluation, delaying the rollout of Apple Intelligence features that debuted in 2024. Apple had previously explored partnerships with Baidu, DeepSeek, and ByteDance before settling on Alibaba.

The partnership gives Apple a compliant, localized AI solution in the world's largest smartphone market, where Greater China sales rose 28% to $20.5 billion in the second quarter. Apple recently regained the No. 2 position in China's smartphone market after a shopping festival offered discounts on the iPhone lineup. For Alibaba, the deal positions Qwen as the AI backbone for Apple's ecosystem in China, potentially boosting its cloud business — which UBS analyst Kenneth Fong estimated grew about 45% in the June quarter.

The integration arrives as US-China technology tensions escalate. Alibaba recently banned employees from using Anthropic's Claude AI, while Meta was forced to dismantle its $2 billion acquisition of Chinese company Manus after Beijing ordered the deal unwound. US lawmakers are also considering curbs on American companies adopting Chinese AI models.

Separately, PrismML, a Khosla Ventures-backed spinout from the California Institute of Technology, released compressed versions of Alibaba's open-source Qwen model Tuesday. The company said it reduced the model from roughly 54 GB to less than 4 GB, allowing all 27 billion parameters to run on an iPhone 15 or newer. Apple is in talks with PrismML about the compression technology, the startup's CEO told CNBC.

Alibaba's U.S.-listed shares have gained about 65% from a year ago but remain below the average analyst price target of $185.78, according to data from 22 analysts compiled by Zacks Investment Research. The stock added 0.75% in after-hours trading to $118.57.

This article is for informational purposes only and does not constitute investment advice.