Fruit chain heavyweight! Domestic iPhone may access Ali's large model AI to drive replacement cycle.

According to the technology media The Information, Apple and Alibaba are reportedly collaborating to develop AI functions for Chinese iPhone users. Sources familiar with the matter revealed that this move is one of Apple's strategies to address declining sales in China, aiming to provide more attractive software features. The AI functions for Chinese iPhones have been submitted for review by relevant domestic authorities. AI transformation is the clear development direction for Apple's phones, and external large models are key. Sources indicated that Apple began testing different AI models from well-known Chinese AI developers starting in 2023 and chose Baidu as the main partner last year. However, the cooperation was later cancelled because Baidu's progress in developing intelligent models for Apple did not meet the standards of the US company. Sources also mentioned that Apple has started considering other options in recent months, evaluating models developed by Tencent, ByteDance, Alibaba, and Deepseek. The report mentioned that Apple ultimately abandoned the highly touted Deepseek because the Deepseek team lacked the manpower and experience needed to support a big client like Apple. It is understood that Alibaba's Qwen series large models have performed well in the open source field and performance evaluations, ranking among the top in the industry. In the early hours of February 4th, Chatbot Arena LLM Leaderboard updated the latest rankings, with the recent release of Qwen2.5-Max breaking into the top ten, surpassing models such as DeepSeek V3, o1-mini, and Claude-3.5-Sonnet, ranking seventh globally with 1332 points. At the same time, Qwen2.5-Max ranks first in mathematics and programming and second in Hard prompts. (Note: Qwen-Max is the latest exploration achievement of the Alibaba Cloud Tongyi team for the MoE model) The market has high expectations for AI functions for Apple phones in mainland China. On February 9th, Apple sent an email to developers announcing that the "Harnessing the Power of Apple Intelligence" developer event will be held in Shanghai on March 25th from 10:00-12:00 Beijing time, focusing on Apple's intelligence and machine learning. According to iOS enthusiasts, iOS 18.4 is expected to be officially released in April 2025, and the Chinese version of Apple Intelligence will also make its debut in this version. Currently, Apple's market share in mainland China is gradually being eroded by domestic smartphone brands. According to Canalys data, the shipment volume of smartphones in mainland China in 4Q4 reached 77.4 million units, a 5% year-on-year growth. Among them, Apple's shipment volume reached 13.1 million units, with a market share of 17%, ranking first. However, due to intensified competition from domestic flagship devices, Apple's shipment volume plummeted by 25% year-on-year. Huaxi believes that the launch of Apple's AI in China is expected to help increase shipments. According to Canalys data, 43% of mainland Chinese consumers show a high interest in AI smartphones. Therefore, the organization believes that the deployment of Apple's AI in China is expected to drive sales in the mainland. The organization further stated that it is optimistic about the boost to Apple's sales after the launch of AI in China, combined with continued innovation in chips, storage, cooling, battery, and other aspects of new iPhone products. Core suppliers in the Apple supply chain are expected to benefit deeply. Related beneficiaries include: 1) assemblers: Luxshare Precision Industry; 2) flex board manufacturers: Avary Holding, Suzhou Dongshan Precision Manufacturing; 3) structural component manufacturers: Lingyi Itech, Lens Technology, BYD ELECTRONIC, Shenzhen Sunway Communication; 4) optical manufacturers: Zhejiang Crystal-optech; 5) battery manufacturers: Zhuhai CosMX Battery; 6) acoustic manufacturers: Goertek Inc., AAC TECH; 7) equipment manufacturers: Bozhon Precision Industry Technology, Suzhou Secote Precision Electronic, Quick Intelligent Equipment, Shenzhen Yanmade Technology Inc., etc. Citi International previously pointed out that the landing of AI applications on mobile phones in 2025 will further drive the replacement cycle, with an expected year-on-year growth of 3% to 1.25 billion units in 2025 in smartphon...