OpenAI is collaborating with Qualcomm and MediaTek to develop an AI agent smartphone, aiming for 300-400 million annual shipments by 2028.

      OpenAI is working on a smartphone that utilizes AI agents in place of traditional apps, with Qualcomm and MediaTek collaborating on a custom processor and Luxshare Precision Industry solely responsible for manufacturing, as per analyst Ming-Chi Kuo. He anticipates annual shipments of 300-400 million units, aiming for mass production by 2028. Following this news, Qualcomm's stock rose by 13%. The supply chain involved is reliable, as Luxshare produces AirPods and Qualcomm powers 75% of the Galaxy S26 series; however, OpenAI has no history in hardware shipping, and past AI devices like the Humane Pin and Rabbit R1 have failed. This effort marks OpenAI’s second hardware initiative alongside the project with Jony Ive.

      According to Kuo, the device isn't simply a smartphone augmented with an AI assistant; rather, it features AI agents as the user interface, rendering traditional apps obsolete. Users would interact with agents for tasks like transportation arrangements, restaurant bookings, email management, research, and messaging, instead of navigating app interfaces. The design would allow straightforward, on-device processing for lighter tasks, while more complex tasks would leverage cloud capabilities. The device would maintain what Kuo describes as a “full real-time state,” capturing user location, activity, communication, and environmental context continuously to assist the agents. This vision aligns with Qualcomm CEO Cristiano Amon's perspective that AI agents will supersede mobile operating systems and apps as the primary interaction layer, necessitating custom hardware designed for efficient, ongoing AI inference rather than adapting existing chips.

      This concept stands apart from OpenAI’s other hardware project with Jony Ive, who is developing a non-phone device that may initially be a smart speaker with a camera and subsequently evolve into glasses, a lamp, and earbuds, with the first product anticipated in early 2027. OpenAI is pursuing two simultaneous strategies in hardware: one that transforms the concept of personal computers without screens, and another that retains the smartphone format but innovates the functionality. Meanwhile, Apple is exploring AI smart glasses with a proprietary chip, cameras, and Siri powered by a Gemini model, set to launch in 2027. Major tech companies are simultaneously determining the ideal location for AI—whether in smartphones, smart glasses, or smart speakers. OpenAI is exploring all these avenues simultaneously.

      The validity of Kuo’s report hinges on the supply chain rather than on the concept. Luxshare Precision Industry is a key Apple supplier that manufactures AirPods, Apple Watch parts, and an increasing number of iPhones. Qualcomm’s Snapdragon 8 Elite Gen 5 powers the majority of Samsung’s Galaxy S26 series and has surpassed Apple in raw multi-core and GPU performance for the first time. MediaTek's Dimensity 9500 competes closely with Qualcomm and Apple regarding CPU performance at a lower cost with improved efficiency. These are not suppliers of a theoretical concept phone but of mass-produced devices. Qualcomm's acquisition of Edge Impulse, an edge AI platform, in 2025 indicated its focus on on-device AI inference. The Snapdragon 8 Elite Gen 5’s Hexagon NPU offers 37% faster AI processing than its predecessor, enabling AI that learns from user behavior and maintains context awareness. Qualcomm is also reportedly developing custom 3D DRAM tailored for AI demands in mobile devices. The components needed for Kuo's envisioned phone already exist; the question remains whether the software paradigm will be effective.

      The financial landscape is significant. Qualcomm's shares were priced at $149.84 before the report, a decline from a peak of $205.95, with earnings growth dropping by 46.9% and gross margins at 55.1%. The company is due to report earnings on April 29, shortly after Kuo's announcement. In February, reports indicated that Qualcomm provided a cautious market forecast amid a shaky smartphone market. A partnership with OpenAI would introduce a new revenue stream at a time when Qualcomm’s main business—supplying modems and processors to phone manufacturers—is challenged by Apple's in-house modem development and MediaTek’s movement into the high-end Android segment. Qualcomm would be aiding in the development of a device aimed at competing with the iPhone while still supplying Apple through at least 2027, showcasing the contradictions within the semiconductor supply chain.

      The AI device sector has seen more failures than successes. The Humane AI Pin, a $699 wearable that projected information onto the user's palm, was rendered unusable as of February 28, 2025, when HP bought Humane's assets for $116 million and closed its servers. The Rabbit R1, priced at $199, initially drew 100,000 pre-orders but only retained 5,000 active users after five months, resulting in a 95% dropout rate; its creator acknowledged that the device launched prematurely. Both products faltered for similar reasons: they introduced new form factors that didn’t address problems that smartphones already solved, and their costs necessitated carrying an additional device. The