OpenAI AI Smartphone Processor Collaboration Fuels Qualcomm Share Surge

Qualcomm shares rose 13% in premarket trading following an analyst report about OpenAI's collaboration with the chip designer and Taiwan's MediaTek. The partnership aims to develop smartphone processors.

Credit: Ariana Drehsler/Bloomberg

TF International Securities analyst Ming-Chi Kuo reported that OpenAI, the creator of ChatGPT, plans an AI-first smartphone. Qualcomm and MediaTek are listed as co-development partners for this device.

Mass production for the AI-first smartphone is anticipated in 2028. Kuo shared this information on social media platform X.

China's Luxshare, an Apple supplier, is the exclusive system design and manufacturing partner for the device, according to Kuo. The analyst, based in Taiwan, is known for his accurate predictions regarding Apple products.

OpenAI has explored consumer AI devices for years. The organisation last May acquired Jony Ive's startup io Products for $6.5 billion. Ive, a former Apple designer, was tapped to lead these efforts.

However, media reports have suggested the proposed device may not be a smartphone. Altman reportedly informed employees that the device would be a "third core device," alongside phones and laptops, according to The Wall Street Journal.

The startup, which is currently loss-making, has also reduced its focus on side projects. Instead, it is concentrating on coding tools for businesses, an AI area demonstrating clear commercial traction.

Launching a smartphone would position OpenAI directly against deep-pocketed rivals such as Apple and Samsung. These two companies collectively hold approximately a 40% share of the global smartphone market.

Such a move would also add to signs that the smartphone would likely retain its central role in daily life during the AI era. Reuters reported last month that Amazon is also planning a renewed push into the handset market.

Apple shares decreased by 1.7%. The company last week named long-time hardware chief John Ternus as CEO. This is a sign that devices would continue to play a central role in Apple's business, even as it looks to catch up in offering AI to users.

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• Qualcomm shares surged 13% in premarket trading on Monday after a report detailing an OpenAI partnership with the chip designer and Taiwan's MediaTek for AI smartphone processors.

• OpenAI is reportedly collaborating with Qualcomm and MediaTek to develop processors for an AI-first smartphone.

• Mass production for the device, for which Luxshare is the exclusive system design and manufacturing partner, is likely in 2028.

Source: REUTERS

China Orders Meta to Unwind USD 2 Billion AI Startup Acquisition

China ordered U.S. tech giant Meta to unwind its acquisition of artificial intelligence startup Manus on Monday, a deal valued at more than USD 2 billion. This directive comes as Beijing intensifies scrutiny of foreign investment in domestic startups developing frontier technologies.

Credit: UNSPLASH

The National Development and Reform Commission (NDRC) stated its commitment to preventing U.S. firms from acquiring Chinese AI talent and intellectual property. This action aligns with Washington’s efforts to restrict Chinese tech firms’ access to advanced U.S. chips.

The NDRC’s office for reviewing foreign investment security announced it would "prohibit foreign investment in Manus in accordance with laws and regulations, and requires the parties involved to withdraw the acquisition transaction." Meta was not explicitly named in this statement.

After a USD 75 million fundraising round led by U.S. venture firm Benchmark in May 2025, Manus shut its China offices in July, laying off dozens of employees. It then moved its operations to Singapore.

This move allowed Manus’s parent company, Butterfly Effect, to re-incorporate in Singapore. The restructuring aimed to bypass U.S. investment restrictions on Chinese AI firms and Chinese rules limiting domestic AI firms’ ability to transfer intellectual property and capital overseas.

California-based Meta stated the transaction fully complied with applicable law and expressed anticipation of an appropriate resolution to the inquiry, in response to Beijing's latest move on Monday. The company acquired Manus to enhance its work on AI agents, which are tools designed to carry out complex tasks with minimal human intervention.

China’s commerce ministry announced a probe into the sale in January, days after Meta completed its acquisition. A ministry spokesperson previously stated that companies involved in foreign investment, technology exports, data transfers abroad, and acquisitions must comply with Chinese laws and regulations.

Xiao Hong, Manus’s chief executive officer, and Ji Yichao, its chief scientist, were summoned to Beijing for talks with regulators in March. Both co-founders were later barred from leaving the country, according to five sources familiar with the matter.

Despite the exit bans on its executives, Manus staff have relocated to Meta’s Singapore offices, and projects are proceeding, according to two sources familiar with the matter. Analysts and lawyers said the rare move to unwind a completed deal underscores Beijing’s intent to assert jurisdiction over cross-border transactions involving Chinese assets, shareholders, or technology under its national security review regime.

Weiheng Chen, senior partner and head of Greater China at law firm Wilson Sonsini, noted that China’s national security clearance will become "a regular closing condition for cross-border tech deals."

Carl Li, a partner with Chinese law firm Zhong Lun, commented in a post on his LinkedIn page on Monday that regulatory analysis of an acquisition is no longer confined to the target company’s place of incorporation. He added that the origin of technology, location of core research and development, nationality and location of the founding team, historical China operations, data flows, and offshore restructuring process may all become relevant.

Li further suggested that in sensitive technology sectors, a deal may be reviewed not only as a merger and acquisition transaction. It could also be considered a potential transfer of strategic technology, data, know-how, and national security-sensitive capabilities.

This order is China’s latest high-profile action to challenge a cross-border transaction involving a non-China incorporated company, amidst geopolitical tensions with Washington. China previously criticised Hong Kong billionaire Li Ka-shing’s CK Hutchison for agreeing a USD 23 billion sale of ports worldwide to a consortium led by U.S. asset manager BlackRock.

The NDRC’s decision serves as a significant warning to Chinese startups, especially in sensitive sectors like technology, that seek to move operations to Singapore to access foreign capital. This practice is often referred to as "Singapore washing."

Ben Chester Cheong, a lecturer at the Singapore University of Social Sciences, stated this action raises the compliance threshold rather than ending such moves. He suggested companies may need to demonstrate a genuine operational shift, including where management sits, intellectual property is owned, research and development is conducted, data is stored, and whether Chinese regulatory approvals are needed.

Manus was hailed early last year by state media and commentators as China’s next DeepSeek after releasing what it said was the world's first general AI agent. The company develops an agent framework that operates on top of existing Western large language models, rather than building its own AI model.

Alfredo Montufar-Helu, a managing director at Ankura China Advisors, highlighted that AI has become central to strategic competition between the world’s two largest economies. He explained that China is asserting it will prevent foreign acquisition of assets deemed important for national security, with AI now clearly among them.

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• China has ordered U.S. tech giant Meta to unwind its acquisition of AI startup Manus, a deal exceeding USD 2 billion.

• The National Development and Reform Commission cited concerns over foreign acquisition of Chinese AI talent and intellectual property.

• Manus had relocated its operations and parent company to Singapore, attempting to bypass investment restrictions.

Source: REUTERS

OpenAI Gains Flexibility, Forms Rival Cloud Partnerships After Microsoft Deal Restructure

Microsoft and OpenAI have renegotiated a key agreement, allowing the artificial intelligence startup to forge new deals with rivals to the software and enterprise giant, including Amazon. This significant change to one of the AI era's most consequential alliances is expected to benefit both organisations.

Credit: UNSPLASH

The loosened ties, anticipated for some time, initially saw Microsoft shares fall 1.3% before closing largely unchanged. Alphabet closed up 1.81%, while Amazon closed down 1.1% following the news.

Microsoft’s early investment, totalling USD 13 billion since 2019, helped OpenAI ascend as an AI pioneer and fuelled growth in Microsoft’s Azure cloud-computing business. Tensions had risen as OpenAI sought the freedom to strike cloud deals with Microsoft’s competitors.

The jointly announced renegotiated terms will help OpenAI secure greater computing power and build an enterprise business capable of competing more effectively with Anthropic. Microsoft will achieve increased certainty regarding its revenues from OpenAI under the deal, while OpenAI gains newfound flexibility.

Microsoft will remain OpenAI’s primary cloud partner, holding a licence to the startup’s intellectual property through 2032. Microsoft will also receive a guaranteed 20% cut of OpenAI’s revenue until 2030, though this total will now be subject to an undisclosed cap.

The fresh terms remove a rider that would have allowed OpenAI to cease paying Microsoft upon achieving artificial general intelligence, defined as the point at which AI matches or surpasses human ability. This addresses a lingering risk for Microsoft.

In an internal memo, OpenAI stated its partnership with Microsoft had been foundational but had limited the startup’s enterprise reach. The memo added that demand had been staggering since OpenAI launched on Amazon’s cloud platform.

Gil Luria, an analyst at D.A. Davidson & Co., commented that the new deal was essential for OpenAI to succeed in the enterprise market. He noted that enterprise customers of AWS and Google Cloud had previously been limited in their ability to integrate OpenAI’s products due to the exclusive relationship.

These customers are now more likely to consider OpenAI alongside Anthropic, Luria added. OpenAI’s promise to use at least USD 250 billion in Azure services by 2032 remains in place.

Microsoft retains the right to make OpenAI products available first on Azure, unless Microsoft chooses not to support them. Furthermore, Microsoft will no longer pay OpenAI a share of Microsoft’s revenue for offering OpenAI models on Azure.

The original deal had granted Microsoft control over how OpenAI’s models were run on the cloud, enabling Microsoft to offer the broadest access. Cloud rivals like Amazon had been able to provide only more limited and legally questionable ways of accessing the models.

Reports indicated Microsoft was weighing legal action against Amazon and OpenAI over a USD 50 billion cloud deal that potentially breached its exclusive cloud tie-up. The new agreement resolves this issue.

Amazon Chief Executive Officer Andy Jassy stated on LinkedIn that OpenAI’s models would be directly available to developers on Amazon Web Services. He added that the two firms would share more details at an event in San Francisco.

Jassy wrote, "With this, builders will have even more choice to pick the right model for the right job." OpenAI has also secured cloud and infrastructure agreements with Oracle and Alphabet’s Google.

Additionally, OpenAI has formed a chip partnership with Nvidia and a manufacturing tie-up with Apple supplier Luxshare, as it expands into consumer devices. Microsoft, meanwhile, is working to reduce its reliance on OpenAI.

Microsoft is developing its own AI models and integrating those from organisations like Anthropic into products, including the 365 Copilot for enterprises. Barclays analysts called the move positive for both companies.

They noted that Microsoft does not need to build out all the data centre needs for OpenAI, freeing up capital for Copilot and other cloud capacity. Ending the exclusivity pact may also help Microsoft address antitrust scrutiny in the UK, the US, and Europe.

Regulators have questioned whether its OpenAI tie-up provides an unfair advantage in the cloud and enterprise AI markets. The restructured deal could alleviate some of these concerns.

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• Microsoft and OpenAI renegotiated their exclusive cloud agreement.

• The new terms allow OpenAI to partner with Microsoft’s rivals, including Amazon, Oracle, and Google.

• OpenAI gains flexibility and computing power, while Microsoft secures revenue certainty and remains the primary cloud partner through 2032.

Source: REUTERS