Chinese consumers love AI smartphones but Apple faces localisation challenges, report says

Chinese consumers show the strongest interest globally in smartphones with artificial intelligence (AI) capabilities, but foreign handset makers such as Apple will face localisation challenges in the market due to regulatory requirements, according to a new report.

According to a report published by market research firm Canalys on Friday, 43 per cent of consumers in China – the world’s largest smartphone market – expressed high to very high interest in AI smartphones, a greater percentage than in India and the US, the second and third biggest global smartphone market, respectively.

The report found that 71 per cent of Chinese consumers were willing to pay extra for AI features, which offered brands a good foundation for establishing a business model and achieving profitability, Canalys wrote.

The Chinese market, however, also presents challenges to global AI smartphone makers thanks in part to local regulations for large language models and data sovereignty, the firm noted.

“All AI-capable smartphones shipping in mainland China’s market are likely to be mandated to use one of the commercial LLMs approved by the government,” the Canalys report said.

Apple, for instance, may not be able to offer its virtual assistant Siri in China using ChatGPT, the popular chatbot launched by US start-up OpenAI in 2022, according to Canalys. Apple announced earlier this month that it is partnering with OpenAI, which will make its chatbot available for free on several Apple platforms later this year.