Qualcomm jumps 12% on report it’s partnering with OpenAI on smartphone AI chip

Qualcomm's shares surged by 12% in premarket trading on Monday, driven by news of a collaboration with OpenAI to develop advanced smartphone processing chips. This partnership aims to bolster OpenAI's ambitions in hardware innovation. Alongside Qualcomm, Taiwanese semiconductor giant MediaTek will play a crucial role in the chip's development, with Chinese manufacturer Luxshare co-designing and constructing the device, according to Ming-Chi Kuo, a prominent analyst at TF International Securities. Kuo indicated that mass production of the new chip is projected to begin in 2028. Despite this positive news, Qualcomm's stock has seen a decline of 13% throughout the year. Neither Qualcomm, OpenAI, nor MediaTek responded immediately to inquiries from CNBC regarding confirmation of the partnership. In Kuo's analysis, he emphasized that OpenAI's ability to provide a comprehensive AI agent service hinges on controlling both the operating system and hardware. He noted that smartphones uniquely capture the user's real-time state, which is crucial for effective AI agent inference. Kuo also asserted that smartphones will continue to be the dominant device category in the near future, making it logical for OpenAI to create a fully AI-operated device, leveraging the user data it has amassed over the years. With smartphone technology already reaching a high level of maturity, Kuo believes OpenAI can effectively collaborate with the supply chain to bring this innovative device to market. Furthermore, he suggested a potential business model where OpenAI may bundle subscriptions with the hardware, thereby establishing a new ecosystem for AI agents in collaboration with developers. Qualcomm, well-known for its Snapdragon processors that power a multitude of Android devices, is positioned as a key player in this collaboration. OpenAI's recent acquisition of Jony Ive's startup, io, for $6.4 billion was part of its strategy to design novel AI devices expected to debut in the coming two years. Last year, CEO Sam Altman hinted that these devices would differ from traditional smartphones, aiming for a more serene user experience. Altman's vision included creating a device that could intuitively understand a user’s thoughts and preferences, contrasting the chaotic nature of modern urban environments. In a related development, it was also reported in September that Luxshare entered into a contract with OpenAI to manufacture consumer devices, further underscoring the growing synergy between AI technology and mobile hardware.