Jony Ive returns to consumer tech with OpenAI in $6.5 billion deal for AI device innovation

SAN FRANCISCO, UNITED STATES: OpenAI will acquire the AI device startup co-founded by Apple Inc. veteran Jony Ive in a nearly $6.5 billion all-stock deal, joining forces with the legendary designer to make a push into hardware.

The purchase – the largest in OpenAI’s history – will provide the company with a dedicated unit for developing AI-powered devices. Acquiring the secretive startup, named io, also will secure the services of Ive and other former Apple designers who were behind iconic products such as the iPhone.

“I have growing sense that everything I have learned over the past 30 years has led me to this place and to this moment,” Ive said in a joint interview with OpenAI CEO Sam Altman. “It’s a relationship and a way of working together that I think is going to yield products and products and products.”

For the British-born designer, the move marks a high-profile return to a consumer technology industry he helped pioneer. Working for years alongside Steve Jobs, he crafted the look and feel of the modern smartphone, in addition to the iPod, MacBook, iPad and Apple Watch. He left Apple in 2009.

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When he departed Apple, CEO Tim Cook pitched the idea that the two parties would remain collaborators. But they never released a product together after Ive’s exit. And now the designer is embarking on a new collaboration with Atlman, who he called a “rare visionary.”

Ive was once described by Jobs as his “spiritual partner”, and his new stint designing rival technology products could be seen as a bad omen for Apple – a company already struggling to compete in AI. In the interview, Altman said Jobs would be “damn proud” of Ive’s latest move.

OpenAI is going to create a product at a level of quality that “has never happened before in consumer hardware,” said Altman. “AI is such a big leap forward in terms of what people can do that it needs a new kind of computing form factor to get the maximum potential out of it,” he said.

Apple shares dropped as much as 2.3 percent in New York on Wednesday. They had been down 17 percent this year through Tuesday’s close.

As part of the deal, OpenAI is paying $5 billion in equity for io. The balance of the nearly $6.5 billion stems from a partnership reached in the fourth quarter of last year that involved OpenAI acquiring a 23 percent stake in io.

Separately, OpenAI startup fund also invested in Ive’s company at that time. Billionaire philanthropist Laurene Powell Jobs is an io backer as well, through her firm the Emerson Collective. Other investors include Sutter Hill Ventures, Thrie Capital, Maverick Ventures and SV Angel. Altman doesn’t have equity in io, OpenAI said.

The deal is expected to be completed this summer, pending regulatory approvals. The takeover of io will provide OpenAI with about 55 hardware engineers, software developers and manufacturing experts. – a team that will build what Ive and Altman expect to be a family of devices.