OpenAI has announced plans to acquire io Products, the hardware startup co-founded by former Apple iPhone design chief Jony Ive, in a $6.5 billion all-stock deal.
The acquisition will see Ive take on the role of Creative Head at OpenAI to develop devices tailored for the generative artificial intelligence era.
The deal, announced in San Francisco, where OpenAI is headquartered, marks a pivotal shift in OpenAI’s strategy from software dominance to integrated AI hardware products.
OpenAI CEO Sam Altman and Ive confirmed the acquisition in a video statement shared on OpenAI’s blog.
“The products that we’re using to deliver and connect us to unimaginable technology. They’re decades old, yeah, and so it’s just common sense to at least think surely there’s something beyond these legacy products we have,” Altman and Ive said.
He described a prototype as the coolest piece of technology the world will have ever seen, though no technical details were disclosed.
Deal details
The companies did not publicly disclose the financial terms of the deal. However, a source familiar with the matter said the transaction is an all-stock deal worth $6.5 billion, based on OpenAI’s internal valuation of $300 billion.
OpenAI already held a 23% stake in io Products prior to the acquisition.
io Products, established a year ago by Jony Ive, evolved from his original design firm, LoveFrom. That firm has reportedly worked with OpenAI for the past two years on developing generative AI devices.
Why the acquisition matters
With Ive’s legacy in product design, including the iPhone, iPad, and MacBook, OpenAI aims to combine ChatGPT’s AI capabilities with iconic hardware form factors. The goal is to bypass traditional platforms such as Apple’s iOS and Google’s Android.
According to Reuters, D.A. Davidson analyst Gil Luria believes OpenAI’s acquisition reflects a strategic move to control its own hardware platform, similar to efforts by other tech giants.
“OpenAI is interested in owning the next hardware platform so they don’t have to sell their products through Apple iOS or Google’s Android.
“This is the same ambition Meta has with the Quest goggles and Meta Ray Bans,” said Gil Luria.
Apple AI rollout has lagged behind Android competitors. Its stock dipped more than 2% following the announcement.
What you should know
OpenAI recently hired Caitlin Kalinowski, who was previously the head of Meta’s augmented reality glasses division, Orion, in November 2024, to head its robotics and consumer hardware division.
Kalinowski, with a wealth of experience in AR hardware development, focuses on integrating AI into physical products and forging key hardware partnerships.
Prior to the io acquisition, OpenAI agreed to acquire Windsurf, an AI-assisted coding tool, in a deal valued at approximately $3 billion. Windsurf, formerly known as Codeium, develops AI-powered tools that assist developers in writing, debugging, and optimizing code using natural language. The acquisition is to enhance OpenAI’s coding capabilities and strengthen its position in the AI-powered software development market.
The company also acquired Rockset, an analytics database company, to strengthen its real-time data processing and retrieval capabilities. This is to support OpenAI’s efforts to handle large-scale data efficiently, which is crucial for training advanced AI models and delivering real-time AI services.