OpenAI Expands Into Hardware With Largest Acquisition Yet
OpenAI has officially acquired io, the design firm founded by former Apple design chief Jony Ive, in a $6.5 billion deal, marking the company’s largest acquisition to date. CEO Sam Altman called Ive “the greatest designer in the world” and emphasized the strategic importance of the partnership.
The move brings approximately 55 designers, engineers, and researchers under OpenAI’s wing. Most of the team will now report to Peter Welinder, OpenAI’s VP of Product, while Ive’s independent firm, LoveFrom, will continue to operate separately.
Past Hardware Efforts and Financial Outlook
This is not OpenAI’s first attempt at AI hardware. Altman was an early investor in Humane, the startup behind the AI Pin, which failed to gain traction and ultimately shut down.
Financially, OpenAI expects to generate $3.7 billion in revenue this year and projects $11.6 billion for 2026. The company recently secured $40 billion in funding led by SoftBank, bringing its valuation close to $300 billion. However, OpenAI faces a key structural shift: it must convert fully to a profit-driven model or risk SoftBank halving its stake.
Acquisition Cost and Strategic Implications
Although the IO acquisition is valued at $6.5 billion, OpenAI already held a 23% stake in the company from a previous agreement, lowering the incremental cost to roughly $5 billion. The company declined to specify how much of the transaction would be paid in cash versus equity.
Altman defended the acquisition amid ongoing cost scrutiny, calling it a logical move toward the future of AI-powered products. He and Ive plan to unveil their first collaborative hardware designs in 2026, aimed at moving beyond smartphones toward “ambient computing” — wearables that interpret the world in real time without screens or keyboards.
Personal Ties Behind the Deal
The partnership between Altman and Ive was initiated through a personal connection. Ive’s son introduced him to ChatGPT, prompting a meeting between the designer and Altman. Since leaving Apple in 2019, Ive has expressed concerns about smartphones' role in daily distraction. He views AI hardware as a way to reimagine how people interact with technology.
“I shoulder a lot of the responsibility for what these things have brought us,” Ive said, referring to smartphones. “This is an opportunity to rethink our relationship with technology.”
Competitive Landscape Intensifies
The acquisition comes as OpenAI faces increasing pressure from competitors such as Anthropic, Google, and xAI, which are rapidly releasing new AI products. In addition to the io deal, OpenAI is also close to finalizing a $3 billion acquisition of Windsurf,a company focused on AI tools for software developers.
With these moves, OpenAI is positioning itself at the intersection of software and physical product design, aiming to define the next generation of AI-integrated experiences.