Apple sued OpenAI last week over trade secrets, alleging OpenAI pushed former Apple employees to share details on unreleased products and coached hires to dodge exit interviews using a document tied to former iPhone design chief Tang Tan. Apple seeks to stop the conduct, destroy proprietary material, and pay damages.

Mark Gurman of Bloomberg reports the lawsuit is already damaging OpenAI's hardware ambitions before any court ruling. The suit squeezes recruitment and creates drag on device work. Over 400 former Apple employees now work at OpenAI, including former design chief Jony Ive, prompting Apple to rebuild teams and offer retention bonuses.

The litigation is reshaping OpenAI's hiring; Apple employees may hesitate to join due to scrutiny. Suppliers in Asia may avoid deepening ties with OpenAI fearing Apple's leverage. Bloomberg Intelligence predicts Apple will secure preliminary relief, potentially slowing OpenAI's hardware plans further.

Despite challenges, OpenAI still targets announcing its first hardware product this year with a 2027 release, though a wider product family including smart speakers and wearables will be harder to build.