By Jiahui Huang


Shares of Baidu rose sharply in Hong Kong on news that the Chinese tech giant will provide artificial-intelligence services to Apple's latest iPhone 16 and other products being sold in China.

Baidu climbed 5.4% on Monday morning after a Chinese media outlet reported the collaboration, citing people familiar with the matter. Hong Kong's benchmark tech index was down 0.2%.

According to a report from Chinese media Cailian Press, the people said Baidu will become Apple's local generative AI model provider for the iPhone 16, the Mac computer operating system and the upcoming mobile operating system iOS 18.

The report said Apple had discussed the collaboration with Alibaba and another Chinese company that provides large-language models before choosing Baidu. It said the U.S. tech giant has to use Chinese-made AI models for its products in China due to regulatory requirements. Baidu's AI services will only be used for Chinese versions of Apple products, the report said.

The Wall Street Journal reported last week that Apple had held preliminary talks with Baidu about using its AI tech, citing people familiar with the matter.

Chinese regulators have to approve generative AI models before they can be launched to the public. Baidu's Ernie Bot is one of more than 40 models that have already been approved.

Baidu and Apple didn't immediately respond to requests for comment by Dow Jones Newswires on Monday.

"If it does come true, it would be a perfect branding campaign for Baidu and its AI product, Ernie Bot," Nomura analyst Jialong Shi told Dow Jones Newswires.

Such an endorsement from Apple would be a big boost for Baidu amid intensifying competition among LLM producers in China. Leading players in this field such as OpenAI's ChatGPT and Google's Gemini aren't available in the country.

The Chinese search-engine company's efforts to develop AI have exceeded analysts' expectations, with faster-than-anticipated monetization, analyst Ann Romain from the Zephirin Group said in a research note.

Baidu Chief Executive Robin Li said the company's AI cloud businesses will likely be a main revenue driver in 2024, projecting that revenue will rise sharply to "several billion yuan."

Daiwa analyst John Choi said the potential partnership with Apple would help Baidu further monetize its AI initiatives.

"Recognition from a global tech powerhouse like Apple" would give Baidu the edge it needs to stay above its Chinese competitors, Nomura's Shi said.


Write to Jiahui Huang at jiahui.huang@wsj.com


(END) Dow Jones Newswires

03-25-24 0315ET