(Yicai) Feb. 13 -- Alibaba Group Holding has confirmed that it will partner with Apple to develop artificial intelligence tailored for iPhones in China.

“They want to use our AI to power their phones,” Joe Tsai, Alibaba co-founder and chairman, said at the World Government Summit in Dubai yesterday. “Apple has always been very selective, and it has held discussions with several companies in China. In the end, they chose to do business with us.”

The stock prices of both companies gained in New York yesterday on the news, which was first reported by US technology media outlet The Information.

Apple [NASDAQ: AAPL] closed up 1.8 percent at USD236.87, while Alibaba [NYSE: BABA] ended 4.9 percent higher at USD118.33. Alibaba’s Hong Kong-listed stock [HKG: 9988] added 2.6 percent today, finishing up at HKD116.70 (USD14.98), after surging by more than 8 percent during trading yesterday.

Apple first unveiled Apple Intelligence at last year's Worldwide Developers Conference and said its AI services would be developed in partnership with OpenAI, the US firm behind ChatGPT.

Apple Intelligence was launched in English-speaking countries such as the United States, the United Kingdom, Australia, and Canada last December. But it is not available in China, which has a rigorous approval process for consumer AI products.

Apple needs a local Chinese partner to support its smartphone services, Tsai noted.

The lack of AI features has been seen as a key factor in Apple’s disappointing recent iPhone sales in China. The Information said the firm has held talks with Chinese firms, including Baidu and Tencent Holdings, to resolve the issue. Apple and Alibaba have submitted materials to the Chinese authorities for approval, it added.

Editor: Tom Litting