Apple sued OpenAI on Friday, alleging the AI company stole the iPhone maker’s trade secrets to develop its own unreleased hardware. The lawsuit names former Apple engineer Chang Liu and OpenAI hardware chief Tang Tan, who previously led product design for iPhone and Apple Watch.

Liu downloaded dozens of confidential Apple files, including unreleased product details and technical specs, the suit claims. Tan allegedly coached Apple employees on how to leave and used company information during recruitment, instructing candidates to bring Apple parts to interviews.

The Hardware Race

OpenAI is building its first consumer device: a smart speaker with AI voice interaction to compete with Amazon Echo, Google Nest, and Apple HomePod. The company targets launch in early 2027, which itself sparked concern from Apple after the trade suit was filed.

OpenAI spokesperson Drew Pusateri said, “We have no interest in other companies’ trade secrets.” The company denies wrongdoing and says its speaker differs substantially from Apple’s existing products.

A Broken Partnership

Apple and OpenAI once worked together to bring ChatGPT into iOS and integrate it with Siri. The partnership faded by January when Apple announced it was turning to Google for its Apple Intelligence features instead.

The lawsuit marks a dramatic escalation between two companies that had seemed aligned on bringing AI to consumers. It also comes days before OpenAI is reportedly eyeing an IPO as soon as later this year, which legal complications could complicate.

What Apple Is Seeking

Apple wants an injunction to stop OpenAI from using its trade secrets. That could delay the smart speaker launch if granted, though OpenAI has said the company has no evidence supporting Apple’s complaint.

The core allegation is clear: that a systematic scheme involving former Apple insiders gave OpenAI a shortcut on hardware design. How courts rule on this could reshape incentives around employee mobility in AI.