The Apple Siri AI icon being displayed on a smartphone, with Apple Intelligence in the background.
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Apple Intelligence is the Cupertino giant's play that aims to bring AI to its devices. It has an improved version of Apple's voice assistant Siri, as well as features that automatically organize your email or transcribe and summarize audio footage.
Apple said Apple Intelligence will roll out in US English this fall, with additional languages, features and platforms coming over the next year. However, the company was tight-lipped on product offerings in China during the AI launch at its annual developers conference this month.
Analysts told CNBC that this is likely to coincide with China's tougher rules on AI, as Apple tries to figure out how to approach the complex market.
Brian Ma, vice president of devices research at IDC, told CNBC via email, “China is in a different world when it comes to AI in terms of the regulatory environment there, so China Apple last week. There's a big asterisk on big announcements.”
Beijing has enacted a variety of regulations over the past few years focusing on areas ranging from data protection to large language models — the large data sets that underpin applications like ChatGPT.
China's AI market is highly regulated. Some regulations include requirements for LLM providers to obtain approval for commercial use of their models. Generative AI providers are also responsible for removing “illegal” content.
Navigating these rules will be difficult for Apple.
First, some Apple Intelligence features are based on Apple's own language model, which runs both on the phone and on the company's own servers.
Under Chinese laws, Apple will likely need to get its AI model approved by authorities.
Second, one of the biggest announcements this month was that Apple's voice assistant Siri could tap into OpenAI's ChatGPT for certain applications — but ChatGPT is banned in China, meaning Apple had to find an equivalent domestic partner. will
Baidu and Alibaba are among the Chinese technology companies that have their own LLMs and voice assistants, classified as companies that Apple could potentially partner with.
Meanwhile, China's internet is heavily censored with regulators concerned about the potential for AI services to generate content that may be against Beijing's views or ideology.
Apple will likely have to create an on-device AI model and a cloud-based AI model that complies with local regulations, Canalys analyst Nicole Peng told CNBC in an email.
The other part of the AI equation for Apple to succeed in China, according to Ben Wood, chief analyst at CCS Insight, is for the company to create a native AI experience on its devices that appeals to Chinese consumers.
“Localizing the Apple Intelligence experience will be a big challenge for Apple,” Wood told CNBC. “As with all technology deployments, there are nuances in how the service is delivered to respect specific customs, regulations and use cases in a particular country.”
A key part of Apple's pitch during the AI launch was its focus on privacy. The company announced private cloud computing, whereby AI is processed on Apple-owned servers. Apple said the processed data is not secure.
Whether the tech titan will be able to fully own its own servers is another question. Chinese iCloud data is stored within servers located in China operated by third parties.
This could mean that Apple may require a similar contribution for its AI computing servers, which would expose the tech giant to criticism over how private the data actually is.
“Maintaining complete user privacy in the AI era in heavily regulated markets like China will be Apple's biggest test yet,” Neil Shah, partner at Counterpoint Research, told CNBC. “It would be difficult for Apple to fully control its private compute servers in China.”
CCS Insights' Wood said Apple's focus on privacy could help introduce AI features to the market. China passed a major data protection law in 2021, which restricts how information is collected and stored.
“Apple's continued focus on privacy and security practices could help appease local regulators and Apple is not afraid to make concessions when necessary,” Wood said.
CNBC caught up with Apple on private cloud computing and the company's AI ambitions in China. A spokesperson did not directly address those questions, but pointed CNBC to an interview with Craig Federighi, Apple's senior vice president of software engineering, in Fast Company's business magazine.
Federighi expressed his desire to bring Apple Intelligence to China.
“We definitely want to find a way to bring all of our best product capabilities to all of our customers,” he said in an interview with Fast Company, adding that “in some regions of the world, there are regulations that Need to work on.”
The Apple executive said the introduction of AI products in China is ongoing, but did not give a timeline.
Smartphone makers globally are touting their AI features to sell high-end phones to consumers who want to hold onto their devices for longer.
Apple faces many challenges in China, where its market share fell to 15 percent in the first quarter of 2024, from 20 percent in the same period earlier, according to Canalys data. Huawei, whose smartphone business was crippled by US sanctions, has revived and is now the largest smartphone player in China, where it competes with Apple for phones targeting the premium segment. Is.
Apple lagging domestic rivals in launching AI features in China is unlikely to hurt iPhone sales.
“For Apple, deploying China-grade Apple Intelligence will be a marathon, not a sprint,” said Shah of Counterpoint Research. Until then, he will have to face some kind of competition.” .
Apple's control of its hardware and software integration will allow it to provide a different experience than its competitors, Wood said.
“Apple has an uncanny ability to better define its services and features than its competitors, even if it's offering essentially the same experience or a subset of what competitors can offer,” Wood said. Set”.
“Despite the current focus on AI from rival China-based smartphone makers, Apple should still be in a strong position.”