OpenAI is betting big on hardware, acquiring Jony Ive’s startup for $6.5 billion

A breakthrough is coming: The technology world is waiting to see if OpenAI and Ive’s team can deliver the breakthrough which has eluded other teams. Sam Altman said.

OpenAI has announced a dramatic move into the hardware industry, announcing a $6.5 billion acquisition of io – the artificial intelligence device company co-founded by legendary Apple designer JonyIve. The largest deal in OpenAI history marks a new phase for the company, as it looks to move beyond software into physical consumer technology.

Ive described this moment as the most significant in his career. He spent decades at Apple, where he created iconic products such as the iPhone, iPad and Apple Watch. “I have a growing sense that everything I’ve learned over the last 30 years has led me to this place and to this moment,” He said in a joint Bloomberg Interview of OpenAI CEO Sam Altman.

This acquisition brings together an impressive team. Alongside Ive, Apple alumni Evans Hankey Tang Tan and Scott Cannon helped shape Apple’s legacy in hardware and software. Hankey succeeded Ive in Apple’s hardware design, Tan led iPhone, Apple Watch, and Cannon’s Mailbox app design after leaving Apple.

About 55 engineers, developers and manufacturing experts, including many former Apple employees, will join OpenAI’s io team.

OpenAI pays $5 billion in equity to io. The remaining $6.5 billion is a reflection of a previous partnership. OpenAI acquired a 23% stake in io late in 2024. The deal should close this summer pending regulatory approval.

This partnership has a lofty goal: to create a family of AI-powered products for an era where artificial general intelligence is the norm, and fundamentally change how people interact with technologies.

“OpenAI is going to create a product at a level of quality that has never happened before in consumer hardware,” Altman said. “AI is such a big leap forward in terms of what people can do that it needs a new kind of computing form factor to get the maximum potential out of it.”

Ive and Altman have been exploring hardware concepts for about two years, with their first device expected to debut in 2026. While they have not revealed specifics, they are clear that their goal is not to replace the smartphone outright. “In the same way that the smartphone didn’t make the laptop go away, I don’t think our first thing is going to make the smartphone go away,” Altman said.

LoveFrom, Ive’s design collective, will remain independent but will now take over all design for OpenAI, including software. The group includes veterans who helped define the look of the Mac and iPhone operating systems.

The acquisition comes as Apple faces pressure for lagging behind in AI, with its own platform relying partly on OpenAI’s ChatGPT. The broader AI hardware market is still young, with few apparent successes.

Meta’s Ray-Ban smart glasses have gained traction, but other efforts have stumbled. Ive was blunt in his assessment of recent AI hardware: “Those were very poor products,” he said, referring to the Humane AI Pin and Rabbit R1 personal assistant device. “There has been an absence of new ways of thinking expressed in products.”

Rabbit founder Jesse Lyu responded to the criticism, Telling The Verge “It’s an honor to get mentioned by Jony Ive and Sam Altman about rabbit and rabbit r1. However, we don’t like to be put side by side with Humane, a company that stopped trying, got acquired, and shut down.”

Humane was acquired by HP in January and its AI Pin operations were shut down in February. Rabbit’s R1 is still available, with the latest updates including a memory logging for better context and a trial of Intern, its upgraded AI-native OS, while the company works on rabbitOS 2.0.

The move to OpenAI is a chance for Ive and his team to shape the future of consumer technology. Ive said.