Dec 4 (Reuters) - Apple AAPL.O and Baidu 9888.HK are working to add AI features to iPhones sold in China, but are facing hurdles that could hurt the tech giant's phone sales in the country, The Information reported on Wednesday.

The companies, which are adapting Baidu's large language models for iPhone users, are grappling with issues such as the LLMs' understanding of prompts and accuracy in responding to common scenarios, according to the report.

Apple and Baidu did not immediately respond to Reuters' requests for comment.

Sales of iPhone in China slipped 0.3%, while rival Huawei posted a 42% surge in sales in the third quarter, research firm IDC had said in October, as competition intensifies in the world's largest smartphone market.

Apple's long-awaited iPhone 16 launch in September had drawn scorn in China for its lack of artificial intelligence features.

Also, Apple's privacy policies do not allow collection of data from iPhone users who make AI-related queries, but Baidu wants to save and analyze this data, according to the report.

Baidu's most advanced model, Ernie 4.0, is being employed as the foundation for Apple's genAI services on the iPhone, Mac and iPad, The Information said, citing people familiar with the matter.

Siri will also use Baidu's AI models, according to the report.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sahal Muhammed)

((ArsheeyaSingh.Bajwa@thomsonreuters.com; +91 8510015800;))