Apple Rattled As OpenAI Acquires io to Develop AI Devices

On May 21, Apple Inc. (NASDAQ:AAPL) shares declined after reports surfaced that OpenAI is acquiring Jony Ive’s hardware startup, io Products, in a $6.5 billion deal. The acquisition has fueled investor concerns about rising competition in the consumer device market.

The acquisition positions OpenAI, co-founded by Sam Altman, to explore AI-powered alternatives to smartphones. Ive, the mastermind behind Apple's iconic iPhone and MacBook designs, left Apple in 2019 and later founded io Products. His move to OpenAI, where he will lead creative efforts in developing next-generation AI-powered consumer devices, has unsettled Apple investors.

Previously, OpenAI partnered with Apple to integrate ChatGPT into its voice assistant, marking a milestone in Apple's "Apple Intelligence" overhaul. However, this acquisition signals a possible competitive shift, with OpenAI entering the hardware space. Ive’s influence at OpenAI is expected to shape future ChatGPT iterations and other AI products, driving innovation toward screenless AI experiences. The deal, which follows OpenAI’s earlier 23% stake purchase in io Products, places Ive at the helm of a new frontier in AI-powered consumer tech, fueling speculation about its impact on Apple’s market position.

It is unclear if OpenAI will continue partnering with Apple on AI innovation. Investor reactions reflect broader concerns over Apple’s future competitive landscape amid shifting industry dynamics, where partnerships and rivalry increasingly blur the lines.

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