2024-04-09 22:14:50 ET
Summary
- Apple is reportedly in talks with Baidu to use its Gen AI platform for iPhones in China.
- The partnership could provide Baidu with a large user base and valuable data, boosting its Gen AI business.
- Baidu's CEO has suggested that Baidu's Gen AI business generated about RMB250-280 million of sales during the Q4 2023 period.
- This revenue could likely multiply to about RMB 5-10 billion in FY 2024.
My Thoughts On The Apple x Baidu Gen AI Partnership
On March 22nd, news broke that Apple (AAPL) has reportedly been in talks with Baidu (BIDU) to leverage the Chinese company's Gen AI platform for the iPhone in China. Such a deal, while still speculative, would make lots of sense for both parties. In my view, there is a close to zero probability that the Chinese government will allow Western Gen AI tools to operate in Mainland China. This thesis is anchored on the observation that data-heavy application products developed by software companies such as Meta Platforms and Google are not allowed in China. Indeed, also OpenAI's ChatGPT is currently not allowed to operate in China. What this means for Apple is that the company will highly likely need to source Gen AI technology/ applications locally. On that note, surrendering or delaying the usage of Gen AI for iPhones sold in China won't really be an option, in my opinion: Investors should consider that the ongoing Gen AI revolution is likely the most significant technological shift of the 21st century (personal view). In that context, if Apple were to sell iPhones in China without this technology, then Chinese handset makers--notably Huawei--would certainly step in to offer Gen AI on their products, handing a major competitive dis advantage to Apple. This would mean that Apple could lose market share in one of the company's most important markets....
Read the full article on Seeking Alpha
For further details see:
Baidu: Likely Partnership With Apple Adds Another Layer Of Upside To The AI Narrative