Apple sues OpenAI over alleged theft of iPhone hardware designs

In a move that could reshape the race for the next generation of consumer devices, Apple Inc. Filed a federal lawsuit against OpenAI on Friday, 10 July 2026. The suit accuses the ChatGPT maker of stealing trade secrets from former Apple engineers and using them to accelerate a planned line of AI‑powered hardware that could rival the iPhone.

Apple’s complaint names OpenAI’s chief hardware officer Tang Yew Tan and former electrical engineer Chang Liu as key actors in a pattern of misconduct that the company says began while the two were still employed at Apple. Apple alleges that Tan, who spent 24 years at the company and most recently served as vice‑president of product design for the iPhone and Apple Watch, instructed Apple employees to bring “digital designs and prototypes” to interviews at OpenAI for so‑called “show and tell” sessions. Liu, who worked on Apple’s most sensitive product development programs for eight years, is accused of exploiting a software bug that allowed him to access Apple’s internal network storage after he left, downloading more than 1,000 pages of confidential engineering data.

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Apple says the theft is part of a broader strategy by OpenAI to shortcut the long, expensive process of building a consumer device. The company’s hardware arm, io Products, was acquired from Jony Ive in 2025 for roughly $6.4 billion. OpenAI is now seeking to launch an AI‑powered smartphone or a range of “screen‑free” devices that would compete directly with Apple’s ecosystem.

OpenAI has denied the allegations, saying it has “no interest in other companies’ trade secrets” and remains focused on building innovative technology. The company issued a brief statement that echoed this position, noting it had not yet reviewed the filing in detail.

Apple’s lawsuit follows a series of tensions that began in 2024 when the two companies announced a partnership to integrate ChatGPT into iOS. Apple had already been working on its own AI engine, Apple Intelligence, and had recently released a major overhaul of Siri. The partnership had been described by Apple as a way to “bring AI into the iPhone experience,” but critics warned that the collaboration could blur lines of ownership over data and intellectual property.

In February 2026, Apple sent a letter to OpenAI raising concerns that confidential information was leaking to the competitor. According to the complaint, OpenAI did not respond, prompting Apple to file the lawsuit in the Northern District of California. The filing cites a “coordinated pattern of misconduct at an institutional level” involving confidential product designs, manufacturing methods and supplier information.

Legal scholars have weighed in on the case’s implications. Mark Lemley of Stanford Law School notes that while hiring former employees is legal in California, the alleged transfer of documents is not. He added that the case could become “very big” if Apple can prove the documents were taken and used by OpenAI. Camilla Hrdy of Rutgers Law School cautions that the case is unusual because it involves hardware rather than software, a domain where trade‑secret law is less tested.

Apple also points to the sheer number of former Apple engineers now at OpenAI — over 400 according to the filing — as evidence of a systematic approach to harvesting proprietary knowledge. The lawsuit claims OpenAI encouraged prospective hires to bring Apple parts for “show and tell” sessions, a practice that some candidates reportedly found surprising. Apple alleges that the practice involved batteries, logic boards and other unreleased hardware components.

The conflict has already rattled the broader tech ecosystem. Analysts say OpenAI’s hardware ambitions could divert attention from its core software products, while Apple’s own hardware pipeline, including new AirPods, glasses and other wearables, may face uncertainty if the partnership falters. The case also arrives amid heightened scrutiny from state attorneys general, 42 have opened investigations into OpenAI’s practices, and growing regulatory attention in the European Union under the AI Act.

Apple’s complaint does not challenge the existing partnership that integrates ChatGPT into Siri. The filing states the integration agreement remains separate and is not being contested. However, the lawsuit could have downstream effects on how the two companies collaborate on future AI features.

Below is a concise timeline of the key events leading up to the lawsuit:

• 2024 – Apple and OpenAI announce a partnership to embed ChatGPT into iOS and Siri.
• May 2025 – OpenAI acquires io Products from Jony Ive for $6.4 billion.
• April 2026 – Analyst Ming‑Chi Kuo reports OpenAI is working on an AI‑centric smartphone.
• February 2026 – Apple sends a letter to OpenAI expressing concerns over potential leaks; no reply is received.
• 10 July 2026 – Apple files a 41‑page complaint in the U.S. District Court for the Northern District of California, naming Tang Tan, Chang Liu, OpenAI, and io Products.