Chinese consumers show the most interest globally in smartphones with artificial intelligence (AI) capabilities, but foreign handset makers such as Apple will face market localization challenges due to regulatory requirements, according to a new report.
According to a report released by market research firm Canalys on Friday, 43 percent of consumers in China — the world’s largest smartphone market — expressed high to very high interest in AI smartphones, a higher percentage larger than India and the US, the second and third largest global smartphone markets, respectively.
The report found that 71 percent of Chinese consumers were willing to pay extra for AI features, which provided brands with a good foundation for creating a business model and achieving profitability, Canalys wrote.
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The Chinese market, however, also presents challenges for global AI makers, thanks in part to local regulations on large language patterns and data sovereignty, the firm noted.
“All AI-capable smartphones shipping to the mainland Chinese market will likely be mandated to use one of the government-approved commercial LLMs,” the Canalys report said.
Apple, for example, 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 some Apple platforms later this year.
The Canalys report found that 71 percent of Chinese consumers were willing to pay extra for AI features. Photo: Shutterstock Images alt=The Canalys report found that 71 percent of Chinese consumers were willing to pay extra for AI features. Photo: Shutterstock Images>
Instead, Apple is likely to adopt models of big local languages — the technology behind AI-generating services like ChatGPT — that are endorsed by the Chinese government, such as Alibaba Group Holding’s Tongyi Qianwen or Baidu’s Ernie, he said. Canalys. Alibaba owns the South China Morning Post.
Apple may also need to set up local servers in China for mainland Chinese user data as part of its Private Cloud Compute system, which was launched earlier this month for private AI processing, Canalys said.
Apple’s plans to add artificial intelligence capabilities to its iPhones have received mixed reactions in China, where consumers are unsure when the features will be available in the country, and as cheaper handsets from brands Chinese companies have been aggressive in integrating AI.
Chinese smartphone makers including Honor, Oppo, Vivo and Xiaomi have started introducing AI features since last year, Canalys said.
Huawei Technologies, on the other hand, has “kept a relatively low profile” on its generative AI investments, despite being one of the earliest smartphone vendors to use AI chips for tasks such as image optimization, according to research firm.
Huawei, similar to Apple and Google, has the advantage of being what he calls a “complete player,” with solutions that include software, cloud infrastructure and end-user devices, he said.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP Facebook and I tweet pages. Copyright © 2024 South China Morning Post Publishers Ltd. All rights reserved.
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