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Apple Intelligence Approval in China a 'Key Catalyst,' Morgan Stanley Says
Summary
Morgan Stanley views the recent approval for Apple to launch its AI services in China as a significant positive development that could drive iPhone upgrades and sustain sales momentum in the company's second-largest market.
Morgan Stanley has identified China's approval of Apple Intelligence as a key catalyst for Apple, Inc. (AAPL), suggesting the move could significantly boost the tech giant's competitive standing in the crucial market ahead of a potential foldable iPhone launch.
Regulatory Green Light
In a note to clients, Morgan Stanley analyst Erik Woodring cited a report from the *South China Morning Post* stating that China's Cyberspace Administration has granted Apple a license to deploy its new AI services. The services will be powered by local technical partners, including Alibaba (BABA) and Baidu (BIDU).
An Alibaba spokesperson separately confirmed to CNBC that its Qwen large language model will be integrated into Apple Intelligence for users in China across iOS, iPadOS, macOS, and visionOS. Morgan Stanley described this as a "key development" that "should level the AI playing field in China."
Market Significance
China is Apple's second-largest market, and consumer sentiment there appears particularly receptive to AI advancements. Morgan Stanley's survey work indicates that Chinese consumers place a higher value on smartphone AI capabilities compared to their counterparts in the U.S. and Western Europe.
AdThe firm highlighted several key findings:
- Chinese iPhone users rank access to Apple Intelligence among the top reasons to upgrade their devices.
- The firm's checks suggest iPhone sell-through in China is already tracking up approximately 10% year-over-year so far in 2024.
- Enhanced AI features could help sustain this sales momentum, creating potential upside to Morgan Stanley's and consensus earnings estimates.
Foldable Phone Catalyst
Analysts noted the timing of the approval is significant, as it precedes Apple's anticipated launch of its first foldable iPhone this fall. According to Morgan Stanley, Chinese iPhone users express the highest interest globally in purchasing a foldable device.
This aligns with broader market data from IDC, which reported that China accounted for approximately 50% of global foldable smartphone shipments in 2025. The combination of new AI features and a novel form factor could provide a powerful incentive for upgrades in the region.
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