Morgan Stanley analyst Erik Woodring described China’s green light for Apple to operate its Apple Intelligence services in the market as a significant catalyst for the iPhone maker, arguing the approval "should level the AI playing field in China" and comes at a critical moment ahead of Apple’s first foldable iPhone launch.
According to reporting cited by Woodring, China’s Cyberspace Administration has issued the necessary license allowing Apple to introduce its AI features on iPhone in mainland China, with Alibaba and Baidu designated as technical partners for the rollout. Alibaba confirmed that its Qwen model will power Apple Intelligence for Chinese users across iOS, iPadOS, macOS and visionOS, the analyst note said.
Why Morgan Stanley views this as important
Morgan Stanley called the regulatory approval a key development for Apple, noting that China is the company’s second-largest market after the United States. The firm’s survey work indicates that consumers in China place relatively greater importance on smartphone AI than consumers in other regions. In particular, Chinese iPhone users ranked access to Apple Intelligence among the top reasons to upgrade their devices, ahead of respondents from the U.S. and Western Europe.
The timing of the approval matters, the note added, because Apple plans to introduce a foldable iPhone this fall. Morgan Stanley’s research found that Chinese iPhone users expressed the strongest interest in purchasing a foldable device. The firm also cited IDC data indicating that China accounted for approximately 50% of global foldable smartphone shipments in 2025.
Sales context and potential upside
Checks conducted by Morgan Stanley suggest that iPhone sell-through in China is tracking at roughly a 10% year-over-year pace year-to-date. The analyst team said that the availability of enhanced AI features on Apple devices in China could help sustain this recent sales momentum, and therefore present upside risk to both Morgan Stanley’s and consensus revenue and unit forecasts.
Woodring’s note emphasizes the combination of regulatory approval, local AI partners, elevated consumer interest in AI features, and the forthcoming foldable product as converging factors that could materially affect Apple’s performance in one of its largest markets.
Impacted sectors
- Technology hardware - smartphone demand dynamics and product upgrades.
- Artificial intelligence - local model integration and service deployment.
- Software and services - platform-level AI features across Apple operating systems.