Shares of Baidu Inc (NASDAQ:BIDU) experienced a significant uptick in Hong Kong trading following reports indicating discussions with Apple Inc (NASDAQ:AAPL) regarding the incorporation of the Chinese internet giant's AI models into Apple's iPhone software specifically for the Chinese market.
According to Chinese media, Baidu's AI model is slated for potential integration into Apple's iPhone 16 and IOS 18 in China. These reports emerged shortly after the Wall Street Journal hinted at preliminary talks between Apple and Baidu regarding this collaboration.
Baidu's Hong Kong shares (HK:9888) surged 6.4% to HK$104.50 by midday, contributing to a 0.5% increase in the Hang Seng index.
Chinese sources also mentioned Apple's previous engagement with Alibaba Group (NYSE:BABA) for a similar collaboration before settling on Baidu, causing a slight dip of over 1% in Alibaba's Hong Kong shares (HK:9988) on Monday.
Utilizing Baidu’s AI models could address U.S. regulatory concerns for Apple, as it seeks to navigate the complex landscape of proprietary AI technology in China, amid U.S. government efforts to control China's access to advanced AI.
This collaboration holds promising prospects for Baidu’s AI initiatives, which have incurred significant investment but have also become a revenue driver for the company in recent quarters. Baidu has been actively advancing its Ernie Bot model and rolling out AI products for both consumer and enterprise sectors in recent quarters.
Apple’s potential adoption of Baidu's AI models follows Samsung Electronics Co Ltd (KS:005930) integrating Baidu’s Ernie bot into its Galaxy S24 smartphone series in China. Samsung employs Google’s AI models outside of China.
Recent reports also indicate Apple exploring discussions with Alphabet's (NASDAQ:GOOGL) Google for the integration of its Gemini AI into iPhones.
Apple has somewhat lagged behind its competitors in implementing AI features over the past year, but media reports suggest the company is working on its AI offerings, aiming to incorporate them into future iterations of its IOS software, particularly IOS 18.
Representatives from Apple and Baidu were not immediately available for comment.
Integration of AI may potentially revitalize iPhone sales in China for Apple, which have seen a decline over the past four quarters amidst heightened government scrutiny and increased competition from rivals like Samsung and Huawei.
Paraphrasing text from "Investing" all rights reserved by the original author.
