In brief
- Analyst Ming-Chi Kuo reports OpenAI is co-developing a smartphone chip with Qualcomm and MediaTek, with Luxshare as exclusive manufacturing partner and mass production targeting 2028.
- Qualcomm surged as much as 12% intraday on the unconfirmed analyst report, partially recovering from its 13% year-to-date decline.
- The reported phone would replace apps with AI agents.
OpenAI is co-developing a smartphone chip with Qualcomm and MediaTek, with Luxshare handling system co-design and manufacturing, according to Ming-Chi Kuo, a reputable leaker and analyst at TF International Securities. He posted the details on X on Monday. Mass production is expected in 2028, with specs and suppliers to be finalized by late 2026 or early 2027.
None of the named companies have confirmed anything as of yet, and OpenAI didn't respond to Decrypt’s request for comments.
The market didn't wait. Qualcomm surged as much as 12% intraday on Kuo's note alone, almost erasing all the 2026 losses at its peak, even though the surge cooled a bit in the following hours.
The device Kuo describes isn't a phone with a chatbot icon. The idea is to kill apps entirely and replace them with an AI agent that handles tasks directly. "Only by fully controlling both the operating system and hardware can OpenAI deliver a comprehensive AI agent service," Kuo wrote. The chip would run a mix of on-device and cloud inference, with the phone tracking user context in real time.
Standalone AI hardware hasn't been kind to anyone who's tried building an AI-centric device. The Humane AI Pin was discontinued. The Rabbit R1 got torched in reviews. The premise that users will swap their existing phone for a purpose-built AI gadget has not been validated at any meaningful scale.
The timing is also jarring. Back in March, a Wall Street Journal report revealed that OpenAI's then-chief of applications Fidji Simo had told employees in an all-hands meeting that the company needed to stop being distracted. “We realized we were spreading our efforts across too many apps and stacks, and that we need to simplify our efforts,” she said, adding that until then, the team was heavily distracted by “side quests.” The focus now, she said, should be coding and enterprise users.
Then OpenAI put that into practice. The Sora video generation consumer app was shut down shortly after. Then, the company folded its OpenAI for Science division. Kevin Weil and Sora's Bill Peebles walked out on April 17.
A multi-year, multi-billion-dollar smartphone program is the opposite of a focus reset.
Besides this phone, OpenAI has a separate hardware endeavor, which started after OpenAI bought Jonny Ive’s hardware startup io for $6.4 billion in May 2025, with the first products due in the second half of 2026. That device was described internally as a non-phone form factor—a wearable, essentially. That device has not been announced yet.
The underlying logic isn't hard to follow. Apple's decision to design its own sillicon—chips tuned specifically for its software—gave it a performance edge no Android rival has matched. An OpenAI chip built around ChatGPT inference would cut out the compromises baked into a general-purpose Snapdragon, and remove Apple and Google from the equation when it comes to which AI features get system-level access.
Qualcomm reports Q2 earnings on Wednesday, where analysts expect revenue of around $10.56 billion. This rumor of an OpenAI chip program may potentially impact its market price.