Citi analysts said in a note Tuesday that Apple's (NASDAQ:AAPL) reported cooperation with Baidu (NASDAQ:BIDU) on AI is mostly driven by regulatory concerns.
Yesterday, WSJ reported Apple is set to use Baidu's ERNIE Bot as China's local LLM model provider for its upcoming iOS18 and charge via API interfaces.
"If true, we believe the collaboration is mostly driven by regulatory concerns while Apple is reported to be in talks with Google and OpenAI amidst internal Gen-AI efforts for other markets," said Citi.
They explained: "China published an AI regulation in 2023 where it requires generative AI models to be approved before launching to the public, and ERNIE is one of the 40 models already approved."
Analysts at the bank also noted that Samsung partners with ERNIE for the Galaxy S24 in China for a list of AI features and "Circle to Search", which is supported by Google's Gemini elsewhere.
"Ernie Bot has over 100m users and handles over 50m queries per day. Baidu CEO expects its AI revenue to reach billions RMB in 2024," added Citi. "We await official announcements for Apple's AI developments at WWDC."