Dongxing: Apple Inc. (AAPL.US) partners with Alibaba (09988), further recognition of domestic AI capabilities.

Dongxing released a research report stating that from the perspective of the computer industry, popular models are emerging frequently, and the rapid technological updates and product iterations have led to significant uncertainties in the industry's final pattern. However, the launch of DeepSeek and the cooperation between Apple Inc. (AAPL.US) and Alibaba (09988) reflect that local large model technology has gradually gained international recognition, showing the ability to participate in international competition. Companies such as Beyondsoft Corporation (002649.SZ), China TransInfo Technology (002373.SZ), Sinodata Co., Ltd. (002657.SZ), who are already deeply collaborating with Beyondsoft Corporation, are expected to benefit from industry development. At the same time, the expansion demand of Alibaba Cloud is expected to drive the development of the domestic computing power chain. Companies such as Dawning Information Industry (603019.SH), Hygon Information Technology (688041.SH), Cambricon Technology (688256.SH), Inspur Electronic Information Industry (000977.SZ) are expected to benefit. Key points from Dongxing: Events: 1. According to Caijing News, The Information reported that Apple Inc. and Alibaba Group Holding Limited Sponsored ADR will cooperate to develop AI functions for Chinese iPhone users. 2. According to information from Apple Inc.'s developer website, Apple Inc. plans to hold a "Deep dive into Apple Intelligence and Machine Learning" developer event on March 25th, explaining the latest developments in Apple Intelligence and machine learning. Analysis: Apple Inc.'s sales in China are slowing down and urgently need AI functions to break through. According to Canalys data, in Q4 24, driven by government subsidies and year-end promotions, the shipment volume of smartphones in mainland China reached 77.4 million units, a 5% year-on-year increase. However, under the competition from local brands, Apple Inc.'s smartphone shipments were 13.1 million units, a 25% year-on-year decrease. Apple Inc.'s CEO explained during an earnings call that the company's performance in the Chinese market was affected by multiple factors, and the lack of Apple Intelligence in the Chinese market was one of the negative factors. Apple Inc. urgently needs to reshape its competitiveness by launching localized AI functions. Alibaba's Qiyi has advantages in technology, openness, ecosystem, infrastructure, and services. We believe that among many domestic large models, Apple Inc.'s choice to collaborate with Alibaba is mainly due to the comprehensive advantages of Alibaba's Qiyi. In terms of technology, Alibaba's Qwen series models cover a wide range of task domains and sizes, enough to meet Apple Intelligence's demand for artificial intelligence technology. The latest flagship model, Qwen2.5-Max, outperforms Meta's Llama model and DeepSeek's V3 in performance and has repeatedly topped authoritative large model lists such as HuggingFace and OpenCompass domestically and internationally. In terms of openness, Alibaba's large models maintain an open-source strategy. On the HuggingFace community, global developers have developed over 80,000 derivative models based on Alibaba's self-developed open-source models, second only to the Llama series. Similarly, the top ten open-source large models in the OpenLLMLeaderboard are all based on Qwen-developed derivative models. In terms of the ecosystem, the total number of models in the Mobula community has exceeded 10,000, covering various areas such as LLM, dialogue, speech, text-to-image, graph-to-video, AI composition, serving over 8 million developers. In terms of infrastructure and services, as the largest cloud provider in China, Alibaba Cloud can support Apple Inc. in team collaboration, resource allocation, and long-term maintenance aspects. Overall, compared to Baidu Inc Sponsored ADR Class A, Bytedance, and other large companies, Alibaba has a more open model ecosystem, more resources, and experience compared to newcomers such as DeepSeek and the "AI Six Dragons," which may have led to this cooperation. This collaboration is expected to bring mutually beneficial results to both Apple Inc. and Alibaba. For Apple Inc., this cooperation is expected to help stop the decline in sales, as local smartphone manufacturers have successively launched AI functions, Apple Inc. can improve its product functionality, stimulate demand for upgrades through intelligence, and alleviate the decline in sales. For Alibaba, if its technology is applied in Apple Inc.'s products, it is expected to significantly increase its daily active users and brand awareness on the consumer end, making up for the gap with products such as DeepSeek, Beanie, and Kimi. At the same time, it is expected to increase the scale of Alibaba Cloud's revenue and profitability. Investment advice: From the perspective of the computer industry, popular models are emerging frequently, and rapid technological updates and product iterations have led to significant uncertainties in the industry's final pattern. However, the launch of DeepSeek and the cooperation between Apple Inc. and Alibaba indicate that local large model technology has gradually gained international recognition, showing the ability to participate in international competition. Companies such as Beyondsoft Corporation, China TransInfo Technology, Sinodata Co., Ltd., who are already deeply collaborating with Qiyi, are expected to benefit from industry development. Additionally, the expansion demand of Alibaba Cloud is expected to drive the development of the domestic computing power chain. Companies such as Dawning Information Industry, Hygon Information Technology, Cambricon Technology, and Inspur Electronic Information Industry are expected to benefit.Companies such as Spur Electronic Information Industry are expected to benefit.Risk warning: Risks such as slower-than-expected development in the artificial intelligence industry, cooperation between Alibaba and Apple Inc. falling short of expectations, compliance issues in the artificial intelligence industry, and market feedback for Apple Intelligence falling short of expectations.