Apple Sues OpenAI, Alleging Hardware Division Is 'Rotten to the Core'

The partnership is over. The battle has begun. In a shocking escalation of Silicon Valley tensions, Apple has sued OpenAI. The accusation? A deliberate campaign to steal trade secrets for its new hardware division. The complaint, filed July 10, 2026, in California federal court, paints a damning picture of a partner turned predator, alleging OpenAI's hardware dreams are built on a foundation of pure corporate espionage.

Apple alleges a “coordinated pattern of misconduct at an institutional level.” A systematic poaching of key employees, who were encouraged to bring confidential information along with them. The lawsuit names names. Two former high-level Apple employees are at the center of the storm: Tang Tan, once Apple's VP of product design for the iPhone and Apple Watch, and now OpenAI's chief hardware officer. And Chang Liu, a former senior electrical engineer.

The allegations are explosive. The 41-page complaint claims Tang Tan didn't just recruit old colleagues. He allegedly directed them to bring “actual parts” from Apple to their OpenAI job interviews. Batteries. Logic boards. Back glass. All for a little “show and tell.” The filing even quotes one surprised candidate: “didn't even know we could take those from the office.” Apple insists this wasn't some isolated incident. It was, they claim, a systematic intelligence-gathering operation.

What Exactly Is Apple Accusing OpenAI Of?

The heart of Apple's case is simple: this isn't innovation. It's theft. The lawsuit pulls no punches, claiming OpenAI's hardware business is “‘rotten to its core by its illegal reliance on misappropriated trade secrets.’” Apple then lays out what it calls a multi-pronged assault on intellectual property that took decades to build.

And the alleged bad behavior goes beyond just 'show and tell' interviews. The complaint accuses Chang Liu of keeping his company-issued laptop after he left for OpenAI in January 2026. From there, Apple claims, Liu exploited a previously unknown security bug to sneak back into its internal networks—while on OpenAI's payroll—and download dozens of confidential files. Minor documents? Hardly. The files allegedly contained “voluminous, detailed information about unreleased products, engineering presentations, technical specifications, and proprietary project data.” The suit even claims Liu coached another Apple engineer on how to copy files without tripping security alarms.

Then there’s the poaching itself. A flood of it. Apple's filing says more than 400 of its former employees now work at OpenAI. But this isn't just the normal Silicon Valley talent shuffle, Apple argues. It's a weaponized brain drain. The company alleges OpenAI actually coached departing employees on how to get around security protocols on their way out the door. This was a deliberate strategy, the suit claims, to grab proprietary knowledge on everything from component designs to secret supplier relationships.

From Partners to Litigants: How Did It Come to This?

What a brutal falling out. Just a short while ago, these two companies were thick as thieves. Remember 2024? Apple announced with huge fanfare it would bake OpenAI's ChatGPT right into Siri and its other AI features. It was the move Apple needed to get back in the generative AI race. OpenAI CEO Sam Altman was even a VIP guest in the audience at Apple's developer conference.

But the relationship started to fray. By early 2026, reports suggested OpenAI was getting restless. The company felt its tech was buried too deep inside Apple's software, and the deal wasn't producing the growth or spotlight it wanted. At the very same time, OpenAI was making aggressive moves into hardware—a direct assault on Apple's turf. That whole effort got supercharged when they recruited legendary Apple design chief Jony Ive and then bought his startup, io Products, for a reported $6.5 billion. And who was a co-founder of that startup? Tang Tan, the man at the heart of this lawsuit.

Apple says it tried to handle this quietly. It contacted OpenAI in February 2026 to flag its concerns. OpenAI's response? Radio silence. That appears to have been the final straw. Now, Apple wants a jury trial and is demanding that OpenAI stop using its trade secrets and destroy any stolen materials. Immediately.

The Future of AI Hardware Hangs in the Balance

OpenAI, for its part, has publicly denied everything. “We have no interest in other companies' trade secrets,” said spokesperson Drew Pusateri in a statement. “We remain focused on building innovative technology that empowers people everywhere.” Fine words. But the lawsuit still throws a harsh, unwelcome spotlight on the company's ambitious—and very secretive—hardware project.

Make no mistake: this is more than just a corporate squabble. It’s a potential turning point for the whole tech industry. The suit puts the ferocious competition for AI talent—what some call the next great platform shift after mobile—on full display. For an industry built on the idea that skilled engineers can move freely between companies, a lawsuit like this could put a real chill on hiring and force everyone to rethink their NDAs. It also scrambles the board for the ongoing AI chip war. Why? Because a hot new hardware device from OpenAI could totally reshape demand for specialized processors.

If this all sounds familiar, it should. The case has strong echoes of the 2017 showdown when Waymo, Google’s self-driving car unit, sued Uber over trade secrets stolen by a former employee, Anthony Levandowski. That fight ended with a settlement, a criminal conviction for Levandowski, and a major setback for Uber’s driverless ambitions. Apple is clearly hoping for a repeat performance. It wants to halt—or at least seriously cripple—a new competitor before a single product hits the shelves. This is a fight to protect decades of design and manufacturing knowledge, the stuff Apple considers its crown jewels. It’s about defending its “teams' hard work and innovations,” as the filing puts it. For anyone wondering what artificial intelligence is and where this is all going, the answer is getting clearer. The next frontier isn't just software. It’s about the physical devices that will put AI in our hands, and this is the fight over who gets to build them.