Due to local regulations, Apple needs a Chinese partner to offer its AI services in China. It had been expected to work with Baidu, but chose not to do so. Deepseek was also considered, but as a small start-up there were concerns it would not scale to meet Apple-driven demand.

Alibaba stock rallied again in Wednesday morning trading, pushing shares of the China tech giant up toward a two-year high. A reported partnership with Apple is helping bolster confidence in Alibaba's AI strategy.

Key Takeaways Apple is reportedly partnering with Chinese firm Alibaba to develop artificial intelligence features for iPhones in China.Apple Intelligence is a key selling point of iPhone 16, but the service has been unavailable in China since its October launch.