Apple Sues OpenAI Over Trade Secret Theft in AI Hardware Push

Apple accuses its former AI partner of systematically extracting confidential hardware designs through ex-employees, deepening a rupture ahead of OpenAI’s expected public listing.

Key Takeaways

• Apple’s federal complaint names OpenAI, its hardware chief and a former engineer, alleging a sustained effort to obtain confidential designs, supplier data and prototypes.
• The suit lands as OpenAI prepares a reported trillion-dollar listing, and as Apple’s incoming chief executive, John Ternus, inherits a rivalry embedded directly in the filing.
• Apple shares barely moved on the news, closing 0.3% lower, suggesting investors read the case as a talent dispute rather than a threat to Apple’s underlying business.

From Partner to Plaintiff

Apple has taken the company behind Siri’s newest capabilities to federal court, accusing OpenAI, its chief hardware officer and a former Apple engineer of running a coordinated effort to obtain the trade secrets behind Apple’s unreleased hardware. The complaint, filed July 10 in the U.S. District Court for the Northern District of California and assigned to Magistrate Judge Virginia K. DeMarchi, marks a sharp reversal for two companies that stood together just over two years earlier, when Apple used its Worldwide Developers Conference to announce that ChatGPT would be built into Siri and Apple Intelligence.

The case, Apple Inc. v. Liu et al., No. 5:26-cv-07078, names OpenAI Foundation, OpenAI Group PBC, io Products and two individual defendants: Chang Liu, a former senior systems electrical engineer, and Tang Yew Tan, OpenAI’s chief hardware officer and a 24-year Apple veteran. Apple frames the alleged conduct as occurring at every level of OpenAI, from junior technical staff to its most senior hardware executive, coordinated at points with outside business partners. Because California law bars enforceable non-compete agreements, trade secret claims under the federal Defend Trade Secrets Act are effectively the only legal lever a company like Apple has to constrain what departing employees carry with them, which is why the complaint leans so heavily on granular, specific allegations rather than a broader claim about poaching itself.

Anatomy of the Allegations

Two former employees anchor the complaint. Liu, who spent eight years at Apple before joining OpenAI in January 2026, is accused of retaining a company laptop and later exploiting an authentication flaw to reach Apple’s internal network storage after he left, downloading dozens of files that included engineering presentations, technical specifications and details of unreleased products. Tan, who departed Apple in February 2024 after two decades rising to vice president of product design for iPhone and Apple Watch, co-founded io Products with former Apple design chief Jony Ive before OpenAI absorbed the startup. Apple alleges Tan used confidential internal codenames while interviewing Apple employees for OpenAI roles, asked candidates to bring hardware components, prototypes and CAD files to so-called show-and-tell sessions, and coached at least one departing employee on how to avoid an immediate security walkout so as to retain access during a standard two-week notice period.

The 41-page filing also describes an episode in which a manufacturing partner allegedly demonstrated a proprietary Apple metal-finishing technique after being misled into believing Apple had authorized the disclosure. Apple says it raised its concerns directly with OpenAI in a February letter that went unanswered, and that its investigation subsequently identified more than 400 former Apple employees now working at OpenAI, including an executive who left Apple’s smart glasses effort as recently as June. Apple is seeking preliminary and permanent injunctions, the return of its confidential materials, damages and a jury trial. Neither Tan nor Liu has responded publicly to the allegations.

A Pattern, Not an Isolated Dispute

OpenAI’s public response has been brief and consistent: a denial of any interest in the confidential information of other companies, paired with a statement that it remains focused on its own technology. Ive, who now leads OpenAI’s device unit, was not named as a defendant despite co-founding io Products alongside Tan; OpenAI absorbed the startup in an all-stock transaction valued near $6.5 billion that closed in the summer of 2025.

The Apple suit adds to a run of legal friction surrounding OpenAI’s hardware ambitions. Hardware startup iyO has separately pursued trade secret claims against OpenAI and io Products, also naming Tan, arising from its own branding and technology disputes. In May, a federal jury in Oakland found that Elon Musk had waited too long to pursue claims that OpenAI abandoned its founding nonprofit mission, a verdict Musk has said he intends to appeal. Each dispute complicates the picture as OpenAI, restructured since October 2025 into a public benefit corporation in which its nonprofit Foundation and Microsoft hold stakes of roughly 26% and 27% respectively, is reported to have confidentially submitted paperwork toward a public listing that bankers have discussed at valuations approaching $1 trillion, a process Anthropic has already begun in parallel. Litigation of this kind tends to surface exactly the internal detail that underwriters and prospective public shareholders examine closely during a listing process.

The Market’s Quiet Verdict

Investors, for now, appear unmoved. Apple shares closed at $315.32 on the day the suit became public, down 0.3%, and eased only marginally further in after-hours trading. The stock gained 2.2% for the week overall, outpacing the Nasdaq, remains within a few points of its 52-week high, and trades close to FactSet’s average analyst price target of $317.88, near a $4.63 trillion market capitalization. That combination suggests the market is treating the case as a talent and intellectual property dispute rather than a threat to Apple’s underlying earnings power, even as commentary from industry analysts ran hotter: Futurum Group’s Daniel Newman observed publicly that OpenAI’s relationships with major technology partners, Microsoft among them, appear increasingly strained.

The filing also arrived days after Apple disclosed a manufacturing agreement worth more than $30 billion with Broadcom to produce custom silicon domestically, a reminder that Apple’s hardware supply chain, and the secrecy surrounding it, remains as central to its investment case as anything happening in generative software. In a sense, the lawsuit is a backhanded compliment to that culture: the entire claim rests on the premise that Apple’s unreleased designs were valuable enough to be worth taking. Notably, the dispute predates Apple’s next quarterly filing; it does not yet appear in Apple’s SEC disclosures and would likely first surface in the legal proceedings section of its third-quarter 10-Q, expected after the company reports earnings on July 30.

The Ternus Inheritance

The case is procedurally young. Apple’s counsel filed the complaint on July 10, and no scheduling order or trial date has yet emerged from the docket. But the dispute carries a charge beyond its legal mechanics. Tan reported to John Ternus, Apple’s incoming chief executive, before his departure, and some Apple designers had once favored Tan over Ternus for the company’s top hardware role; a substantial share of the former Apple employees OpenAI has recruited are drawn from the hardware engineering division Ternus still runs. When Ternus succeeds Tim Cook as chief executive on September 1, under a transition Apple’s board approved earlier this year, he inherits not only Apple’s product roadmap but litigation against a rival built in large part from his own former team.

For institutional observers, the more durable questions are structural rather than personal. Discovery could compel disclosure of competitively sensitive material on both sides, arriving just as OpenAI works to present orderly governance to prospective public investors and Apple manages its own leadership handover. Apple has walked this road before, settling a comparable trade secret dispute with chip startup Rivos two years after filing it, which suggests a negotiated resolution remains plausible here too, particularly given the two companies’ continuing commercial relationship over ChatGPT’s integration into Apple’s products. Whichever way it resolves, the case has already shown that the sharpest competitive line in Silicon Valley now runs through hardware secrecy, not software partnership.