From Software to Hardware: OpenAI Acquires Former Apple Design Chief Jony Ive’s Startup io for $6.5B to Build the Next Generation of AI Consumer Tech

OpenAI Takes Major Step Into AI Hardware By Acquiring Jony Ive’s Startup

OpenAI has secured a significant foothold in AI hardware with the purchase of io, a design company founded by former Apple chief designer Sir Jonathan “Jony” Ive.

The deal, reportedly valued at $6.5 billion in an all-stock transaction, marks OpenAI’s largest acquisition to date and signals its intent to expand beyond software into physical AI devices.

Who Is Jony Ive And Why Does His Startup Matter

Jony Ive is widely regarded as one of the most influential product designers of the past two decades.

During his 27 years at Apple, he played a key role in shaping the look and feel of some of the company’s most iconic products including the iPhone, iPad, MacBook Air, and Apple Watch.

His design philosophy emphasises simplicity, detail, and user experience — qualities that helped Apple become one of the world’s most valuable companies.

After leaving Apple in 2019, Ive founded io a year ago with fellow Apple alumni Scott Cannon, Evans Hankey, and Tang Tan.

L-R: Evans Hankey, Apple's former head of hardware design, and Tang Tan, former Vice President of iPhone & Apple Watch Product Design.

The studio has grown to around 55 employees, combining design, engineering, and research talent focused on new product development.

Ive’s work has long been praised for marrying simplicity with precision, and he describes the current device landscape as “legacy products” that no longer fully serve users.

The collaboration with OpenAI is intended to explore new ways for people to interact with technology, potentially moving away from smartphones toward “ambient computing” — lightweight wearables and other innovative formats that blend seamlessly into daily life.

A Partnership Rooted In Shared Vision

The relationship between OpenAI’s CEO Sam Altman and Ive began when Ive’s son introduced him to ChatGPT.

Intrigued by AI’s creative possibilities, Ive connected with Altman and found an opportunity to reinvent technology interaction.

Their partnership started from LoveFrom, a creative collective Ive founded two years ago.

Altman described Ive as “the greatest designer in the world,” praising the startup’s first prototype as “the coolest piece of technology that the world will have ever seen.”

Altman reflected on the dominance of the smartphone, noting,

“We have been waiting for the next big thing for 20 years.”

Ive echoed this, expressing a shared ambition to develop “amazing products that elevate humanity.”

Both see current devices as overwhelming and noisy, with Altman comparing smartphones to “being bombarded with notifications and flashing lights in Las Vegas.”

OpenAI’s Strategy To Lead In AI Devices

OpenAI has long signalled its interest in hardware, hiring specialists like Caitlin Kalinowski, former head of Meta’s augmented reality glasses project, to lead robotics and consumer hardware efforts.

The acquisition of io fits this strategy, merging hardware design expertise with OpenAI’s research and engineering strength in San Francisco.

This move comes amid a highly competitive environment, with companies like Google, Anthropic, and Elon Musk’s xAI also investing heavily in AI product innovation.

The deal follows OpenAI’s recent $3 billion acquisition of the AI-assisted coding tool Windsurf and a $40 billion funding round led by SoftBank, which valued OpenAI at around $300 billion.

Financially, OpenAI is projecting revenues of $3.7 billion this year and expects to reach $11.6 billion in 2026.

While the acquisition cost is significant, OpenAI already held a 23% stake in io from a prior deal, making the incremental price about $5 billion.

Regulatory approval is still pending.

What Does The Future Hold For AI Hardware

The exact nature of the devices under development remains a closely guarded secret, but the goal is to create a new family of AI-powered products that could reshape how people engage with technology.

Ive’s team will join OpenAI’s product division, reporting to vice president Peter Welinder, while Ive and his LoveFrom studio maintain independence for other projects.

Peter Welinder is the Vice President of Product and Partnerships at OpenAI.

Ive’s vision is to create gadgets that are “less socially disruptive than the iPhone,” aiming for seamless integration into daily life without the distractions of traditional screens or keyboards.

Altman believes this approach “could completely reimagine what it means to use a computer.”

The timing is crucial.

Previous AI-focused consumer devices, like the AI pin from Humane or the Rabbit AI assistant, struggled to find market success.

OpenAI’s robust financial backing, combined with ChatGPT’s widespread popularity, positions it better than many startups to potentially succeed where others have faltered.

A Challenge To Established Tech Giants

OpenAI’s push into AI hardware also poses a challenge to established players such as Apple, which has lagged in integrating generative AI into its products and delayed updates to Siri.

Apple shares fell nearly three per cent after news of the acquisition emerged.

Meanwhile, Amazon is enhancing its Alexa assistant with AI, targeting smart home devices rather than wearable or personal AI gadgets.

Whether OpenAI and Ive can create a new class of AI devices to replace or complement smartphones remains to be seen.

Industry experts highlight the difficulty of dethroning the smartphone as the primary interface for technology, but many agree that Ive’s design acumen gives OpenAI a strong chance to pioneer the next wave of consumer devices.

As Ive puts it,

“It’s just common sense to at least think, surely there’s something beyond these legacy products.”