According to master forecaster Ming-Chi Kuo, OpenAI is getting ready to shake up the smartphone market with a phone that replaces standard apps with AI agents.
Kuo is known for making good forecasts regarding Apple products, but on Sunday, the TF International Securities analyst posted on X that he was going from Cupertino to Mission Bay.
He said that OpenAI is working with Qualcomm and MediaTek to make processors for smartphones.
He also said that Luxshare is the only company that would design and make the system, with mass production set to start in 2028.
He added, “OpenAI can only offer a full AI agent service if it has complete control over both the operating system and the hardware.”
Noah Kenney, the founder and chief consultant of Digital 520, a technology consultancy and services organization in Atlanta, said, “There isn’t a dataset of how people use their phones right now.”
He told TechNewsWorld, “Having a device gives you that data.” “Then OpenAI will be able to make AI models that help people use their devices without having to control them with their hands or voices.”
AI-First Phone Model
According to Siddardha Vangala, a senior AI systems engineer at MasTec, an infrastructure engineering and construction company in Coral Gables, Florida, the biggest benefit to OpenAI and consumers is that AI is built right into the device itself.
He told TechNewsWorld, “Smartphones today see AI as an extra feature.” “If OpenAI makes its own phone, it could change how people use it to focus on intelligence instead of apps.”
He said, “That would allow for things like persistent memory across tasks, deeper personalization, and faster on-device reasoning.” “Users would interact with a single smart interface that can coordinate services in the background instead of launching separate apps.”
He went on to say, “From an engineering point of view, owning the hardware also lets you optimize AI workloads at the silicon and operating system levels, just like Apple did with iPhones for machine learning.”
There is another way that OpenAI benefits. Sunil Manjunath, co-founder of Techhoor, a site that focuses on technology news, digital innovation, and new tech trends, said, “Right now, if you use ChatGPT on your iPhone, Apple is still in control.”
“OpenAI has to pay Apple fees and can only do what Apple lets it do,” he told TechNewsWorld. “A phone changes everything.”
“If OpenAI makes its own device, it will be in charge of everything, from the chip to the screen to the AI that runs underneath,” he said. “You get a phone with built-in intelligence, not an add-on. It’s part of everything. OpenAI can talk to you directly, without anyone else taking a cut.
Barriers to Entry
It won’t be easy to get into the smartphone industry. Just ask Amazon, Meta, and Microsoft.
“OpenAI is not a hardware company and must prove its phone performs well against the competition in terms of memory, camera quality, size, weight, screen responsiveness — all of that can be a challenge for an organization without a hardware background,” noted Jennifer Kent, senior vice president and principal analyst at Parks Associates, a market research and consulting company specializing in consumer technology products, in Dallas.
She also said that OpenAI’s plan is to have an agent on top of a lot of apps and control all interactions with users. “Many developers will see that as a threat to their very existence,” she told TechNewsWorld. “OpenAI will have to work hard to show that app developers will do well on an OpenAI operating system.”
She remarked, “iOS and Android are the most popular smartphone operating systems, especially in the U.S.” “Apple customers are very loyal, and all of the current players make experiences that are better across devices and family members, as long as you stay within an ecosystem.” This is a big reason why people don’t migrate to a new OS.
Max McCaskill, a staff writer for WhistleOut, a search engine for cell phone and internet services, said, “Smartphone users are very loyal to their brands, and most people have years of their personal data backed up in their chosen ecosystem.”
“It’s hard enough for businesses to get people to switch from Android to Apple, which have been around for more than ten years,” he told TechNewsWorld. “A new, untested system from OpenAI will automatically make average users who aren’t tech-savvy or don’t trust AI suspicious.”
Kent also said that people are really worried about AI. She said, “Our Net Promoter Score shows that ChatGPT’s user satisfaction rates are low.” “OpenAI will need a lot of advertising to get people to want an OpenAI phone.”
Concerns About Privacy and Security
Privacy and security will be the most important issues for an AI phone. Zbynek Sopuch, CTO of Safetica, an intelligent data security solutions provider based in Prague, said, “The AI agent acts on behalf of the user, so it will access messages, apps, and personal data, as well as track all activity across the device.”
He told TechNewsWorld, “These very broad permissions are a slippery slope of both collecting too much data and having almost no idea what is being collected.”
“Users won’t know what the AI is doing or what data it is using in the end.” He remarked, “We’ve already seen how bad people have used AI, so think about an even worse situation where an attacker can get into multiple systems at once if a device is compromised.”
Harry Maugans, CEO of Privacy Bee, a data protection company in Atlanta, said that the privacy and security issues are what really scare him. He told TechNewsWorld, “An AI-first phone needs to see everything you do to be useful.” “Kuo says the phone would ‘continuously understand users’ context,’ which is a nice way of saying that it would always be watching them.”
He said, “There isn’t a security model for agentic systems with that level of access yet.”
Make the Phone Feel Outdated?
For now, OpenAI’s intentions for smartphones seem more like ideas than real plans. Greg Sterling, co-founder of the market research firm Near Media in San Francisco, said, “I’m sure OpenAI has thought about making a smartphone; whether it will is another matter.”
He told TechNewsWorld, “I think OpenAI will come out with some kind of device next year.” “They won’t make a phone, but they’ll wait to see how people react and then decide whether or not to make one.”
Anshel Sag, a senior analyst for mobility, 5G, and XR at Moor Insights & Strategy, a technology research and consulting firm in Austin, Texas, said that OpenAI’s possible smartphone plans show that a wearable isn’t good enough to capture the user experience and that people will keep using phones even when AI wearables become popular.
He told TechNewsWorld, “Phones are still hubs for connectivity and computing, and they probably will be for a long time.”
Mark N. Vena, president and principal analyst at SmartTech Research, a technology consulting firm in Las Vegas, said that the real question is not whether OpenAI can build a phone, but whether it can make the phone feel old.
“If OpenAI sends out just another glass slab with a smarter chatbot, Apple, Samsung, and Google will quickly box it in,” he told TechNewsWorld. “But if it makes a device where agents really do reduce friction, replace app-hopping, protect privacy, and make everyday tasks easier, it could be the first serious rethink of the smartphone in years.”
Rob Enderle, president and main analyst at the Enderle Group, an advisory services firm in Bend, Ore., said, “If this move works, it could be the biggest change in personal computing since the iPhone or PC launch.”
He told TechNewsWorld, “It could even easily replace the need for PCs,” if it were focused on that market at first. “There are far fewer application dependencies, and the PC form factor has probably been obsolete since agentic AI came out.”
