OpenAI Acquires Jony Ive's AI Hardware Startup io Products in $6.5B Deal

OpenAI has announced the acquisition of io Products, an AI hardware startup founded by former Apple design chief Sir Jony Ive, in an all-equity deal valued at approximately $6.5 billion. This strategic move marks OpenAI's significant entry into the consumer hardware market, aiming to develop AI-native devices that transcend traditional screens and interfaces.

io Products, Inc. was established in 2024 by Jony Ive, along with Scott Cannon, Evans Hankey, and Tang Tan, all former Apple designers. The company focused on developing hardware products that leverage artificial general intelligence. Prior to the acquisition, io had approximately 55 employees, including engineers, designers, and software developers.

Jony Ive is renowned for his tenure at Apple Inc., where he served as Chief Design Officer and was instrumental in designing iconic products such as the iMac, iPod, iPhone, iPad, and Apple Watch. After departing Apple in 2019, Ive founded LoveFrom, a design collective that has collaborated with brands like Ferrari and Airbnb.

The acquisition deal, valued at $6.5 billion, was structured as an all-equity transaction. OpenAI had previously acquired a 23% stake in io for $1.5 billion in late 2024, and the recent deal involved purchasing the remaining 77% for $5 billion. Post-acquisition, the io team will integrate with OpenAI's research, engineering, and product divisions in San Francisco. Ive's design firm, LoveFrom, will remain independent but will lead creative and design efforts across OpenAI and io.

OpenAI CEO Sam Altman and Jony Ive have expressed a shared vision for developing AI-native devices that go beyond conventional screens and interfaces. While specific product details have not been disclosed, the collaboration aims to create a new category of devices that redefine user interaction with AI. The first product is expected to launch in 2026.

This acquisition marks a significant shift in the tech industry, as OpenAI moves from being primarily a software-focused AI research organization to entering the consumer hardware market. By developing its own AI hardware, OpenAI aims to establish a direct relationship with consumers, potentially bypassing existing platforms like Apple's iOS and Google's Android. This move could intensify competition in the AI device space and challenge the dominance of established tech giants.

The collaboration also emphasizes the importance of ethical design and user well-being. Ive has expressed concerns about the negative consequences of excessive technology use, such as addiction and mental health deterioration. The partnership aims to create products that are more human-centric and beneficial to users.

Following the announcement, Apple's stock experienced a decline of over 2%, reflecting investor concerns about increased competition in the AI device market. This development underscores the growing importance of AI hardware and the potential challenges it poses to established tech companies.

OpenAI's acquisition of io Products and partnership with Jony Ive represents a bold step into the consumer hardware market, aiming to redefine user interaction with AI through innovative design and technology. The tech industry will be closely watching this collaboration, as it has the potential to set new standards for AI integration in consumer products.