- US has expressed concern for Apple’s AI deal with Alibaba in China
- About one in five of Apple’s sales is in China-the second largest market
- Apple is also slammed for manufacture in India not US
The Trump administration and Congress are concerned about Apple’s agreement with Alibaba to run some of the AI features at iPhones in China, noticing potential concerns about privacy (via New York Times).
Concerns have been raised for data sharing and national security consequences with the potential legal requirements for Apple and Alibaba to comply with Chinese regulator rules that are central to the discussion.
Furthermore, only Alibaba has publicly confirmed the deal where Apple remains silent – this may indicate potential uncertainty or an unfinished deal, or it may just be a typical Apple movement of keeping the development under tight wrapping until the last moment.
The trade is investigated in the midst of the ongoing tensions in the US China with concern to help China’s AI development and improve Chinese military AI capacity both noticed.
“Alibaba is a poster child of the Chinese Communist Party’s military-civil fusion strategy and why Apple would choose to work with them at AI is anyone’s guess,” proclaimed representative Raja Krishnamoorthi from Illinois.
Apple has already dropped an agreement with Chinese Chipmaker YMTC over pressure from the United States, and Cupertino Tech giant also faces challenges from the trade war-induced tariffs and the supply chain change out of China, with industry experts warning of sharp price increases for consumers participating in the next update cycle.
However, China is the company’s second largest market, which accounts for about a fifth of its sales, which highlights the importance of an agreement so as not to miss the local smartphone manufacturers.
The US administration has considered restricting US companies from doing business with them like Alibaba and other Chinese companies, but no details have been confirmed.
Although the company has tried to diversify its supply chain, President Trump has criticized Tim Cook for increasing production in India and calling for domestic US presentation instead – one of the president’s ultimate goals.
Ultimately, Apple risks questions, no matter what way the deal fluctuates, either missing out on millions of Chinese sales or potentially serious consequences in the United States. Apple had a market share of 13% smartphone in China in the first three months of 2025 (via Canalys), putting it several steps behind Xiaomi, Huawei, Oppo and Vivo.
“The US smartphone market is expected to experience significant volatility over the next two to three quarters, influenced by storage corrections and weakened consumer confidence,” explained Canaly’s research manager Le Xuan Chiew.
