OpenAI partners with Qualcomm and MediaTek for AI phone, aiming for 300M+ shipments by 2028

OpenAI is building a smartphone designed around AI agents instead of traditional applications, with Qualcomm and MediaTek collaborating on a custom processor and Luxshare Precision Industry handling exclusive manufacturing, according to a report from TF International Securities analyst Ming-Chi Kuo. Kuo, known for his detailed Apple supply chain insights, estimates that if successful, the device could ship between 300 million and 400 million units annually, a volume that would surpass Apple’s iPhone sales and directly challenge the two companies controlling about 40% of the global smartphone market. The final specifications and supplier list are expected by late 2026 or early 2027, with mass production slated for 2028. Following the report, Qualcomm’s shares jumped as much as 13% in premarket trading. Neither Qualcomm, OpenAI, nor MediaTek has confirmed the partnership. While this is an analyst prediction rather than an official announcement, the supply chain details Kuo describes are grounded in reality, involving the same manufacturers that produce the devices people use today.

The concept behind the device is a complete departure from current smartphone design. This is not a phone with an AI assistant bolted on. Instead, the AI agent becomes the primary interface, rendering the app model obsolete. Users would no longer download applications or navigate through screens. Instead, they would interact directly with agents that handle tasks like ordering transportation, booking restaurants, managing emails, conducting research, and composing messages. The architecture would process lighter tasks, such as context awareness, memory management, and smaller AI models, directly on the device, while offloading complex inference to the cloud. Kuo describes the device as maintaining “full real-time state,” continuously capturing the user’s location, activity, communications, and environment to feed the agents.

This vision aligns with what Qualcomm CEO Cristiano Amon has been promoting throughout 2026: that AI agents will replace mobile operating systems and apps as the primary interaction layer, requiring hardware built from the ground up for continuous, power-efficient AI inference rather than retrofitting existing chipsets with neural processing units.

This project is separate from OpenAI’s other hardware effort with Jony Ive, the former Apple design chief whose company io is developing a non-phone device, reportedly starting with a smart speaker featuring a camera, followed by glasses, a lamp, and earbuds, with the first product expected in early 2027. OpenAI is effectively pursuing two parallel hardware strategies: one that reimagines personal computing without a screen, and another that retains the phone form factor but replaces everything inside it. Meanwhile, Apple is testing AI smart glasses with a custom chip, cameras, and a Siri system powered by a Gemini model, targeting a 2027 release. The question of whether AI lives in your phone, on your face, or on your counter is being answered simultaneously by every major technology company, each placing different bets. OpenAI is betting on all of them at once.

The credibility of Kuo’s report rests on the supply chain details, not just the concept. Luxshare Precision Industry is a major Apple supplier that assembles AirPods, Apple Watch components, and an increasing share of iPhones. Qualcomm’s Snapdragon 8 Elite Gen 5 powers 75% of Samsung’s Galaxy S26 series and has, for the first time, surpassed Apple in raw multi-core and GPU performance. MediaTek’s Dimensity 9500 matches Qualcomm and Apple in CPU performance at a lower cost with better efficiency. These are not the suppliers of a concept phone. They are the suppliers of devices that ship in the hundreds of millions. Qualcomm’s acquisition of Edge Impulse, an edge AI developer platform, in 2025 signaled a strategic commitment to on-device AI inference across device categories. The Snapdragon 8 Elite Gen 5’s Hexagon NPU delivers 37% faster AI processing than its predecessor, supports agentic AI that learns from user behavior, and includes a personal knowledge graph and continuous context awareness through an upgraded sensing hub. Qualcomm is also reportedly building custom 3D DRAM specifically optimized for AI workloads on mobile devices.

The silicon for the phone Kuo describes does not need to be invented from scratch; the components already exist. The question is whether the software paradigm will work.

The financial context adds another layer. Qualcomm’s stock was trading at $149.84 before the report, down from a 52-week high of $205.95, with earnings growth declining 46.9% and gross margins down to 55.1%. The company reports earnings on April 29, two days after Kuo’s report. In February, Bloomberg reported that Qualcomm gave a “tepid forecast in sign of shaky phone market.” An OpenAI partnership would represent a new revenue stream in a market where Qualcomm’s traditional business, supplying modems and processors to phone manufacturers, is under pressure from Apple’s efforts to develop its own modem chips and MediaTek’s encroachment on the premium Android segment. Qualcomm would be helping build a device designed to challenge the iPhone while continuing to supply Apple with modem chips through at least 2027, a business relationship that embodies the contradictions of the semiconductor supply chain.

The graveyard of AI devices is littered with failures. The Humane AI Pin, a $699 wearable with a laser projector that beamed information onto the user’s palm, was permanently bricked on February 28, 2025, when HP acquired Humane’s remnants for $116 million and shut down the servers. The Rabbit R1, a $199 “large action model” device, attracted 100,000 pre-orders but retained only 5,000 active users after five months, a 95% abandonment rate. Its founder admitted the device launched too early. Both failed for the same reason: they created new form factors that solved no problem the smartphone did not already solve, at price points that demanded the user carry a second device. The OpenAI phone takes a fundamentally different approach. It is not an additional device. It is a replacement for the device 4.7 billion people already carry, in the same form factor, with the same basic capabilities, but with a radically different interaction model. Whether that is enough to avoid the graveyard depends on whether agents can do what apps do, better, faster, and without the friction of learning a new paradigm.

AI is already reshaping the mobile app ecosystem, with “vibe-coded” applications flooding the App Store in such volume that Apple has had to crack down on submissions. The EU is preparing to force Google to open Android to rival AI assistants including ChatGPT and Claude under the Digital Markets Act, requiring equal system-level access for voice activation and deep integration. The smartphone’s software layer is already in flux. Samsung’s Galaxy S26 runs a triple AI engine with Gemini, Perplexity, and Bixby. Google’s Pixel 10 hands off multi-step tasks to background AI agents. Apple Intelligence processes queries on-device with an emphasis on privacy. Every major phone manufacturer is moving toward AI-first experiences, but all of them are constrained by backward compatibility with billions of existing apps and the operating systems that run them. OpenAI’s advantage, if the phone materializes, is that it has no legacy. It can design a clean-slate interaction model without worrying about whether Instagram’s notification system works or whether the banking app renders correctly. The disadvantage is that users may not want a clean slate.

They may want their apps and an AI assistant that works around them, which is what Samsung, Google, and Apple already offer.

The central question is whether Kuo’s projection of 300 to 400 million annual shipments is realistic. That volume would make the OpenAI phone one of the most successful consumer electronics products in history. For context, Apple ships roughly 230 million iPhones per year. Samsung ships approximately 220 million Galaxy phones. A new entrant reaching those volumes has no precedent in the smartphone era. The projection reflects the scale of OpenAI’s ambition, not a reasonable base case for a first-generation device from a company that has never manufactured hardware, sold through carriers, managed warranty claims, or operated a supply chain at consumer scale. The Jony Ive device carries the same risk: a company whose expertise is in large language models attempting to become a consumer electronics manufacturer, a transition that requires competencies in industrial design, supply chain management, retail distribution, and after-sales service that OpenAI does not have and cannot acquire by hiring one designer, however talented.

The 2028 timeline gives OpenAI two years to finalize specifications, secure component supply, build manufacturing capacity, develop the agent-first software platform, negotiate carrier partnerships, establish retail distribution, and convince hundreds of millions of consumers to abandon their iPhones and Galaxy phones for a device built by a company that has never shipped hardware. The Humane AI Pin took longer than that and shipped a device that lasted nine months before being permanently disabled. The ambition is extraordinary. The supply chain is credible. The concept addresses a genuine architectural limitation of current smartphones, which were designed around apps in 2007 and have not fundamentally changed since. But the distance between a credible supply chain report and a shipping product that displaces the iPhone is the distance between a thesis and a business, and every company in the AI device graveyard had a thesis too.