Tencent Holdings' (HKG:0700) recent move to integrate WeChat with China's major smartphone manufacturers via an agent-to-agent (A2A) capability poses a risk to Apple's market position in China, according to Jefferies analysts.
The tech company recently confirmed that it is partnering with smartphone makers Huawei, Honor, Xiaomi (HKG:1810), OPPO and vivo to roll out A2A features, according to Jefferies.
"The collaboration is ongoing, and those capabilities will be rolled out gradually," WeChat was quoted by Nikkei Asia as saying.
The first device to support the feature is the Honor 500 Pro smartphone, Jefferies said.
The integration works by allowing a smartphone's AI assistant to take verbal instructions, then convert them into a text message and send it to WeChat.
"The WeChat agent will interact with its mini programs' agents to execute a transaction on the cloud. The benefit to [smartphone] OEMs is [a] faster upgrade cycle and potential [revenue] share," said Jefferies.
However, Jefferies warned that "it may not meet [Apple's] privacy focus, but iPhone could risk lagging behind in China."
The investment bank noted that the integration "will revolutionize the app-centric eCommerce ecosystem today, as consumers do not have to give specific merchant choice. AI could choose for them."
Jefferies said this would turn smartphone makers into a "user intent distributor," making them gatekeepers to which e-commerce players the consumers pick to make purchases.
"It would give [smartphone] OEMs bargaining power that did not exist before," Jefferies said.
However, the bank said Apple could lag behind in China as Tencent has not partnered with the US company on A2A. Jefferies cited Apple's existing agreement with Alibaba Group (HKG:9988) as a potential reason. Apple teamed up with Alibaba to deploy the Chinese tech and e-commerce company's AI model for Apple Intelligence in China.
WeChat's A2A also involves limited on-device AI, as transactions would likely take place in the public cloud, said Jefferies.
"Therefore, it may not meet [Apple's] privacy requirements. However, as this ecosystem grows, iPhone could risk market share loss to local brands."
Apple's share of the smartphone market in China had shrunk to 19% in the first quarter of 2026 from 22% in the fourth quarter of 2025, according to Counterpoint Research.
However, it still ranked second overall in the three-month period, next to Huawei.
Counterpoint said Apple continued to benefit from the strong demand for the iPhone 17 series earlier this year.
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