Apple’s iPhone sales dropped sharply in China in the first quarter of this year as the company saw strong competition from domestic brand Huawei, according to a new report from market research firm Counterpoint Research.

Apple saw sales of its iPhones fall 19.1% in the first three months of the year, Counterpoint’s data showed, as Chinese telecommunications and consumer electronics giant Huawei saw a resurgence in its smartphone business.

The Shenzhen, China-based firm saw sales of its smartphones surge a whopping 69.7% in the first quarter, Counterpoint said.

This was thanks in no small part to the launch of Huawei’s Mate 60 smartphone, which comes with a high-end chip that supports next-generation 5G mobile connectivity.

Starting in 2019, the U.S. slapped sanctions on Huawei in an effort to stop it from accessing such technology, nearly wiping out Huawei’s smartphone business.

Now Huawei is staging a comeback. The company is the fourth-largest smartphone maker in China, according to Counterpoint’s Tuesday research note, piling the pressure on Apple, which ranks as third-biggest.

Apple shares were slightly lower in U.S. premarket trading Tuesday.

“Apple’s sales were subdued during the quarter as Huawei’s comeback has directly impacted Apple in the premium segment,” Ivan Lam, senior research analyst for Counterpoint Research, said in statement.

“Besides, the replacement demand for Apple has been slightly subdued compared to previous years.”

Lam hinted that the iPhone maker could still see a recovery in China with the possibility of new color options for its flagship devices, aggressive discounts, and new AI features expected to be presented at its upcoming Worldwide Developers Conference (WWDC) in June.

“That has the potential to move the needle significantly longer term,” he said.

Chinese device makers Xiaomi and Oppo have both integrated Qualcomm’s Snapdragon 8 Gen 3 processor — which is designed for AI applications — in their latest flagship phones.

Huawei spinoff Honor, meanwhile, showed off an AI-powered eye-tracking feature in its latest flagship smartphone, the Magic 6 Pro, that allows a user to control a car using their eyes.

Chinese smartphone firms will likely start including new AI advancements in their mid-price phones in future, Counterpoint said.

Japanese tech conglomerate SoftBank is looking to develop a “world-class” Japanese-language-specific generative artificial intelligence model, and plans to invest $960 million in the next two years to bolster its computing facilities, according to a Nikkei report. 

Training of large language models (LLM), such as OpenAI’s Chat GPT, requires advanced graphics processing units, which SoftBank plans to purchase from U.S. chip giant Nvidia, the Nikkei reported Monday, citing anonymous sources. 

The investment of 150 billion yen ($960 million) will be spent in 2024 and 2025 and adds to 20 billion yen that SoftBank spent on computing infrastructure last year, the report said.

The latest investment is believed to be the largest of its kind by any Japanese company, and when completed, will likely give SoftBank the most powerful computing capabilities in the country, Nikkei added.

According to another report from Nikkei Asia, Japan lacks private companies with the high-performance supercomputers that are needed to build LLM, despite increased interest in the tech.

SoftBank’s reported investments could change this and give Japan a strong domestic player in its generative AI space at a time when international players are trying to enter the market.

Just last week, OpenAI opened its first office in Tokyo as part of its global expansion plans. Meanwhile, Microsoft said it would invest $2.9 billion over two years to increase its cloud computing and AI infrastructure in the country.

In fiscal year 2024, SoftBank expects to complete its first model, which will have 390 billion parameters, an indication of LLM complexity. It will also start developing a higher-performance model with 1 trillion parameters as soon as 2025, according to Nikkei.

Other local players like Japanese telecommunications company NTT have announced plans to develop an LLM this fiscal year. NTT says it will also invest 8 trillion yen ($51.7 billion) into growth areas like data centers and AI over the next five years.

According to data from Statista Market Insights, Japan’s AI market is expected to grow to around $13 billion by 2030, about 17 times larger than in 2023.

SoftBank’s stock price has trended positively as the company shifts its focus to AI, and is up by about 20% year-to-date. It is also the majority owner of the chip company Arm, which has experienced a boost in sales expectations amid the AI boom.

SoftBank is reportedly working on building AI data centers across Japan and recently joined a project to build a 65 billion yen center in Hokkaido.

Read the full report on Nikkei Asia.

BEIJING — Chinese video streaming platform iQiyi is turning its attention to the country’s aging population, while using artificial intelligence tools to bolster content production.

One of iQiyi’s near-term goals is to improve the product offering for older users, CEO and founder Gong Yu said Tuesday at the company’s annual conference.

“It seems simple but it’s not, because in the past 10, 20 years the motto has been to serve young people, and not be traditional,” he said in Mandarin, translated by CNBC.

He noted how users in their 40s or older are dropping off because increased screen time is accelerating eyesight deterioration, and it’s harder for them to read small text. Gong also pointed to estimates that predict about one-fourth of China’s population will be considered elderly in 2033, rising to one-third in 2053.

China is rapidly aging as fewer people have children and lifespans increase. Births have fallen despite Beijing’s efforts in the last decade to unwind restrictions on households for one child each.

Fewer children, Gong said, means each child becomes more important. He said iQiyi would improve the quality of its content for children.

IQiyi is also tapping artificial intelligence tools for making content production more efficient.

Liu Wenfeng, iQiyi’s chief technology officer, gave a speech at the Tuesday conference about “embracing AI.” He showed off the company’s tools for quickly imitating a multi-camera shot in a virtual environment, and described how the virtually created elements from clothes to buildings could be re-used or commercialized in a future metaverse.

Liu also said iQiyi’s AI tools can significantly reduce the time spent analyzing novels for production-worthy stories, as well as detect which parts of existing dramas bore or interest viewers.

Tuesday morning’s presentations included a clip from OpenAI’s Sora text-to-video promotional video, but iQiyi executives did not share whether they had similar technology at scale.

Instead, Liu emphasized how generative AI allows more people to be creators, and that the scarcest attribute would then be excellent creativity and superior aesthetics.

IQiyi cannot publicly share more details about its AI capabilities due to confidentiality, but creators who partner with the company can learn more, founder Gong said.

Looking ahead, he said the company would also look to tap opportunities in overseas markets as growth in China moderates.

IQiyi in late February reported it swung to a profit in 2023 for the first time since it listed in the U.S. in 2018. For nearly every year since, the company posted annual losses of $1 billion or more.

The company is next due to release quarterly results on May 16.

In late February, iQiyi CFO Wang Jun told CNBC in an exclusive interview he is “excited” about potential new business opportunities with the emergence of OpenAI’s text-to-video tool Sora.

He said such tools can help iQiyi tell stories more creatively, and that internally, it is exploring the text-to-video space though it is not working with Sora.

For 2023, iQiyi said its original content accounted for a record 65% of major dramas it released.

The company claims it now has more than 50 in-house studios that produce more than 200 shows a year.

The growth of in-house production reflects a bigger change in China’s film industry over the last five years, Wang said, noting that previously the majority of content was made by third parties, resulting in bidding wars for shows which raised costs.

Other major Chinese video platforms with longer-form content include Tencent Video, Alibaba-owned Youku and Bilibili.