Morgan Stanley sees China Apple Intelligence approval as key AI catalyst

Investing.com -- Morgan Stanley analyst Erik Woodring said in a note to clients on Thursday that China's approval of Apple Intelligence represents a key catalyst for Apple, calling it a development that "should level the AI playing field in China" ahead of the company's first foldable iPhone launch.

Citing reporting from the South China Morning Post, Woodring noted that China's Cyberspace Administration has granted Apple a license to roll out its AI services on iPhone in the country, with Alibaba and Baidu serving as technical partners.

An Alibaba spokesperson confirmed to CNBC that its Qwen model will power Apple Intelligence across iOS, iPadOS, macOS and visionOS for Chinese users.

Morgan Stanley called this "a key development for Apple," noting China is the company's second-largest market after the U.S.

The firm's survey work found Chinese consumers place greater importance on smartphone AI than consumers elsewhere, with Chinese iPhone users ranking access to Apple Intelligence among the top reasons to upgrade, well ahead of the U.S. and Western Europe.

Morgan Stanley believes the timing is significant given Apple's upcoming foldable iPhone launch this fall, noting Chinese iPhone users express the highest interest in purchasing a foldable device, and China accounted for approximately 50% of global foldable smartphone shipments in 2025, according to IDC.

The firm’s checks are said to suggest iPhone sell-through in China is tracking approximately 10% year-over-year year-to-date, adding that enhanced AI features could help sustain recent sales momentum, creating potential upside to Morgan Stanley and consensus estimates.

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