Alibaba Chairman Joe Tsai said that the Chinese tech company will partner with Apple on AI for iPhones sold in the China market, while speaking at the World Governments Summit in Dubai on Thursday.

"They talked to a number of companies in China. In the end they chose to do business with us. They want to use our AI to power their phones. We feel extremely honoured to do business with a great company like Apple," Tsai said.

Apple did not immediately respond to a request for comment.

Rolling out AI tools in China is crucial for Apple as iPhone sales dipped in the holiday quarter, usually the U.S. firm's biggest period of sales. AI features are the chief selling point of its latest devices in other countries but were missing from models in China where regulations require a local partnership.

Alibaba has become a Chinese AI favourite among investors early in 2025, with its stock price up over 40% so far this year.

The firm in late January released a new version of its Qwen 2.5 artificial intelligence model whose functionality it said surpassed that of DeepSeek-V3, which caused a stir earlier this year for its capability and low cost.