Apple sues OpenAI over alleged theft of AI hardware secrets
In a dramatic escalation of Silicon Valley tensions, Apple has filed a federal lawsuit against OpenAI, its hardware unit io Products and two former top Apple engineers, claiming they orchestrated a systematic, brazen theft of the iPhone maker’s most closely guarded trade secrets.
The complaint, filed on July 10, 2026, in California federal court, paints a messy but deliberate picture of corporate espionage designed to fast-track OpenAI’s highly ambitious push into consumer AI hardware. The timing is particularly critical, arriving just a few months ahead of OpenAI IPO.
According to the court documents, OpenAI allegedly targeted and recruited key Apple talent, subsequently encouraging them to exfiltrate confidential proprietary information valued at “hundreds of billions of dollars,” representing decades of painstaking innovation.
The targeted trade secrets span hardware engineering (circuit designs, component architecture, power management, and unreleased product plans hidden under internal codenames), proprietary manufacturing processes, custom machinery installed in supplier factories, specialized metal alloys, and advanced testing data including failure analyses.
The suit spotlights two ex-Apple executives who are now central to OpenAI’s hardware efforts: Chang Liu, a senior electrical engineer who spent eight years at the company, and Tang Yew Tan (also referred to as Tang Tan), a high-level design executive with ties to Jony Ive’s circle.
Apple claims that Liu downloaded sensitive files even after his departure, exploiting a security vulnerability and coaching others to do the same. Tan allegedly used Apple codenames during hiring interviews and instructed recruits to bring actual physical components and drawings to OpenAI discussions. Furthermore, Apple accuses OpenAI of systematically coaching departing employees on how to evade Apple’s security protocols.
This isn’t a case of isolated opportunism, Apple argues that it’s a coordinated “at every level” scheme. OpenAI acquired io Products in 2025 for around $6.5 billion, merging it into its hardware division under Tan as Chief Hardware Officer.
The group has reportedly hired dozens of Apple engineers and even partnered with former Apple suppliers like Foxconn. Prototypes for OpenAI’s first consumer device were announced just as pressure mounted to ship hardware capable of rivaling Apple’s entire ecosystem.
And honestly, the stakes could hardly be higher. Apple’s hardware and software empire depends on those closely guarded secrets in supply chain coordination, electromagnetic interference work, battery systems, display craft, and “design for manufacturability.”
If OpenAI successfully capitalizes on Apple’s decades of hardware innovation, it could gain an unfair shortcut in the race to build AI-powered gadgets, potentially shaking up the long-standing (if sometimes uneasy) relationship between the two giants.
OpenAI has pushed back, saying it’s all about legitimate innovation, not taking someone else’s secrets. Still, the lawsuit seeks immediate injunctions to stop any alleged use of pilfered information, the return of any stolen materials, and substantial financial damages.
This blockbuster case shows just how ferocious the fight over AI supremacy has become. OpenAI is trying to bring its vision to life beyond just software, perhaps with devices powered by ChatGPT, while Apple is drawing a hard line to safeguard the crown jewels that make it one of the most prominent names on the stock heatmap.
Industry observers expect intense legal fireworks, with massive ripple effects likely to hit tech talent wars, supplier alliances, and the future trajectory of consumer AI hardware.
The tech crowd is watching closely, and, honestly, a bit nervously: will this lawsuit slow OpenAI down in its hardware ambitions, or will it ignite an even harsher rivalry? Either way, one thing feels clear: Apple is not backing down when it comes to defending its playbook.