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 well-known analyst and leaker at TF International Securities. Kuo shared the details on X on Monday.
Mass production is expected in 2028, with specifications and suppliers set to be finalized by late 2026 or early 2027.
Financial markets reacted swiftly. Qualcomm surged as much as 12% intraday on Kuo's note alone, nearly erasing all of its 2026 losses at its peak, though the gains cooled somewhat in the hours that followed. The move came despite the report remaining unconfirmed, and partially offset Qualcomm's 13% year-to-date decline heading into the session.
The device Kuo describes is not a conventional smartphone with an AI chatbot feature bolted on. The concept is to eliminate traditional apps entirely and replace them with an AI agent that handles tasks directly on behalf of the user.
"Only by fully controlling both the operating system and hardware can OpenAI deliver a comprehensive AI agent service," Kuo wrote.
According to the report, the chip would run a combination of on-device and cloud-based inference, with the phone continuously tracking user context in real time.
The track record for standalone AI hardware, however, has been discouraging. The Humane AI Pin was discontinued. The Rabbit R1 was widely panned in reviews. The premise that consumers will abandon their existing smartphones for a purpose-built AI device has not been validated at any meaningful scale.
The timing of the reported initiative also raises questions. In March, a Wall Street Journal report revealed that OpenAI's then-chief of applications Fidji Simo had told employees at an all-hands meeting that the company needed to stop spreading itself too thin.
"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 the team had been heavily distracted by "side quests." She said the focus should shift to coding and enterprise users.
OpenAI subsequently moved to put that into practice. The Sora video generation consumer app was shut down shortly after. The company then folded its OpenAI for Science division. Senior executives Kevin Weil and Sora's Bill Peebles departed on April 17.
A multi-year, multi-billion-dollar smartphone program would represent the opposite of a strategic focus reset.
This reported phone is separate from another hardware project OpenAI is already pursuing. That effort began after OpenAI acquired designer Jony Ive's hardware startup io for $6.4 billion in May 2025, with first products expected in the second half of 2026. That device was described internally as a non-phone form factor — essentially a wearable — and has not yet been publicly announced.
The underlying strategic rationale is not difficult to understand. Apple's decision to design its own silicon — chips tuned specifically for its software — gave it a performance advantage no Android rival has matched. A chip built by OpenAI around ChatGPT inference could eliminate the compromises inherent in a general-purpose Snapdragon processor, and remove Apple and Google from the equation when it comes to which AI features receive system-level access.
Qualcomm is scheduled to report its second-quarter earnings on Wednesday, with analysts expecting revenue of approximately $10.56 billion. The circulating reports of an OpenAI chip program may have a bearing on how the market receives those results.
Why it matters
System-level chip control would allow OpenAI to grant its AI agent access to hardware features — such as sensors, memory, and real-time context tracking — that third-party apps on iOS or Android cannot access without platform-owner permission.
The reported 2028 mass-production target means the project would unfold well after OpenAI's Jony Ive-led wearable device is expected to ship, creating two parallel hardware bets with different form factors and timelines.
Qualcomm's intraday stock reaction to an unconfirmed analyst note illustrates how sensitive semiconductor valuations are to AI hardware supply-chain speculation ahead of the company's scheduled earnings report.
