It seems the ongoing AI mania will not relegate the good ol’ smartphone obsolete after all, judging by the purported collaboration between OpenAI, Qualcomm, and MediaTek on a custom smartphone processor, raising huge red flags for Apple’s iPhones in the process.
We already know that OpenAI has been working on a range of consumer-oriented AI devices. These include AI-powered earbuds that bear the internal codename “Sweetpea” and might retail under the “Dime” brandname. The device would purportedly rely heavily on cloud-based AI processing, while featuring a 2nm Samsung Exynos chip for some on-device processing.
OpenAI is also working on another consumer device that is reportedly shaped like a pen and sports a size similar to that of the Apple iPod Shuffle. The device bears the internal codename “Gumdrop,” and is supposedly bereft of a dedicated screen. Additional details include:
Now, however, the famous analyst, Ming-Chi Kuo, has penned an interesting post on X, disclosing that OpenAI might have relegated its planned range of consumer devices to the proverbial cryo unit for now, focusing its efforts instead on the familiar smartphone.
As per Kuo’s tidbits, OpenAI is already working with Qualcomm and MediaTek on a dedicated smartphone processor, with Luxshare likely to serve as the key assembler of the smartphone that is slated to eventually challenge the dominance of the Apple iPhone.
According to OpenAI’s vision of what the future of the smartphone will look like, people will soon stop using apps, relying instead on real-time AI agent inference using a combination of on-device and cloud-based models. In this vision, the smartphone’s hardware will power the collection of a given user’s “full real-time state,” deal with memory hierarchy management, and furnish the requisite computing power for on-device inference, with complex tasks offloaded to the cloud for further processing. Critically, as per Kuo’s assessments, “smartphones will remain the largest-scale device category for the foreseeable future.”
For OpenAI, the rationale is simple: it wants to control the entire stack and not just its AI models, emulating Apple’s strategy of vertical integration to develop its own processor, hardware, and UI. According to the analyst, the smart phone’s specifications will likely get finalized by late 2026 or Q1 2027, with OpenAI’s high-end smartphone likely to entail annual shipment volumes of between 300 million and 400 million units.
For Apple, of course, this presents a dire challenge, one that could feasibly end its reign in the smartphone space for good, especially as Apple’s intrinsic AI capabilities are nothing to wax lyrical about, with the company already forced to rely on Google’s Gemini AI models to power its upcoming revamped Siri voice assistant.
OpenAI’s strategy also fundamentally upends Apple’s business model, which is all about milking revenue from its sprawling ecosystem of services built on smartphone apps. If there are no apps via the App Store, Apple really has no leadership.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025.
As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover.
When I’m not writing, I’m traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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