Manufacturing Moves Away From China

OpenAI is taking its hardware ambitions seriously, and that means making some strategic moves on the manufacturing front. According to Taiwan-based outlet UDN, citing supply-chain sources, the company has transferred production of its first AI-powered consumer device from Luxshare to Foxconn Technology Group (HNHAF), also known as Hon Hai Precision Industry Co., Ltd. The reason? Concerns about keeping manufacturing in mainland China.

Instead, the device will reportedly be assembled in Vietnam or the United States, fitting with OpenAI's apparent preference for a supply chain that doesn't run through China. It's a geopolitical hedge that's becoming increasingly common in tech hardware.

The project, which goes by the internal codename "Gumdrop," is still in the design phase. A commercial launch isn't expected until sometime between 2026 and 2027, so we're still a ways out from seeing this thing in stores.

Foxconn Becomes a Cornerstone Partner

This manufacturing shift positions Foxconn as a critical partner across OpenAI's entire hardware strategy, from AI servers powering cloud infrastructure to consumer devices that users will actually hold in their hands.

Foxconn already has serious credibility in consumer electronics manufacturing. The company assembles products like Apple Inc.'s (AAPL) iPhone and Alphabet Inc.'s (GOOG) (GOOGL) Google Pixel. Landing OpenAI's hardware orders could provide meaningful momentum to Foxconn's long-term growth trajectory, especially as AI hardware becomes a bigger category.

OpenAI did not immediately respond to MarketDash's request for comment.

What the Device Might Actually Be

So what exactly is OpenAI building? Details are still sparse, but the product could take the form of a smart pen or a compact audio device roughly the size of an iPod Shuffle, according to the UDN report citing sources.

The device may feature a microphone and camera to sense its surroundings and support tasks like transcribing handwritten notes directly into ChatGPT. Think of it as an AI companion that lives in your pocket and helps you interact with the world in ways that go beyond staring at a smartphone screen.

Earlier this year, OpenAI CEO Sam Altman outlined his vision for such a device during a podcast conversation. The goal, he said, is to build hardware that is "ambiently aware" and could fundamentally reshape how people engage with technology. Altman has hinted that the design will be "simple and beautiful and playful," which makes sense given that Jony Ive is involved.

Gene Munster, managing partner at Deepwater Asset Management, previously suggested that OpenAI represents Apple's first meaningful competitive challenge in nearly 20 years, especially after the AI firm's $6.5 billion acquisition of Ive's hardware startup.

For now, this remains a project in development. But if OpenAI can pull off a consumer device that makes AI feel natural and useful in everyday life, it could be a pretty big deal.