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OpenAI is quietly getting closer to hitting the smartphone market, and new information from an analyst suggests its first AI-focused phone could go into mass production as soon as the first half of 2027. The report from renowned Apple analyst Ming-Chi Kuo points to an aggressive timeline as competition in AI-driven devices begins to increase.

At the center of the device may be a custom processor made by MediaTek. The chip is expected to be based on a modified version of the Dimensity 9600 and made using TSMC’s advanced N2P process, and will probably go into production in the second half of 2026. While details are still emerging, the phone’s camera processing system, or ISP, is expected to be a standout feature, with a focus on improved HDR performance to better understand real-world visuals – a vital requirement for AI-powered interactions.

Hardware is being designed with AI at the core. A dual neural processing unit setup is expected to handle different layers of AI tasks, while next-gen memory and storage standards like LPDDR6 and UFS 5.0 are aimed at preventing performance bottlenecks. Talking about security, features like pKVM-based virtualization and inline hashing can help keep sensitive data safe in an always-on AI environment.

OpenAI’s bigger vision seems to go beyond just another smartphone. The company is betting on what analysts call an “AI agent phone” – a device that moves away from app-centric use toward task-based interactions. Instead of handling multiple apps, users will rely on an AI system that understands context and completes actions in real time.

To make this possible, tight integration between on-device processing and cloud computing will be critical. Basic, recurring tasks – like understanding user behavior or the environment – ​​will run locally on the phone, while more AI workloads will be handled in the cloud.

Many industry players are also expected to participate in this project. With MediaTek, Qualcomm is reportedly working together on processor development, while Luxshare is said to be the exclusive partner for system design and manufacturing. Still, Luxshare could face tough competition from well-known players like Foxconn, which dominates global smartphone assembly.

Why is OpenAI coming to hardware now? Analysts cite three main reasons for this: complete control over hardware and software to optimize AI performance, access to real-time user context through personal devices, and the sheer scale of the global smartphone market, which remains unmatched.

If the timeline holds, the company could ship about 30 million units in 2027 and 2028 combined. This will position OpenAI as a serious new contender in the premium smartphone space, especially as AI becomes the next battleground for consumer tech.

There is also a business angle to this. OpenAI could bundle its AI services into devices, creating a subscription-driven ecosystem, similar to how other tech giants lock users into their platforms.

While plans are still in the works, one thing is clear: OpenAI isn’t just making a phone. It is trying to redefine the way smartphones work in an AI-first world.