Apple Gives iPhone Designers Rare Bonuses to Fight OpenAI Poaching - Bloomberg.com
Apple provides OpenAI distribution to hundreds of millions of iPhone users. OpenAI provides Apple on-device AI it cannot yet build in-house. That is the arrangement — no money on either side, just an exchange of assets each company values more than cash. The awkwardness is that the same company receiving that distribution deal is simultaneously spending millions poaching the engineers who built the distribution pipeline.
Apple awarded out-of-cycle bonuses worth several hundred thousand dollars to many members of its iPhone Product Design team this week, according to people with knowledge of the matter speaking to Bloomberg. The payments were targeted: aimed squarely at engineers who design the physical device, the people OpenAI has been systematically peeling away for the past year.
Leading that poaching campaign is Tang Tan, a 25-year Apple veteran who helped turn Jony Ive sketches into mass-produced iPhones, iPads, and Apple Watches. Tang is now OpenAI chief hardware officer. At least 25 former Apple employees joined OpenAI in 2025 alone, including senior figures from design, manufacturing, and engineering, the Times of India reported. OpenAI hired more than 40 Apple people in a single month last year, spanning camera, silicon, industrial design, manufacturing, audio, smartwatch, Vision Pro, software, and human factors, according to a Bloomberg newsletter.
The talent drain accelerated after OpenAI acquired io Products — the AI hardware startup co-founded by former Apple design chief Jony Ive — for $6.5 billion in May 2025. That deal brought the people who knew how to build things the Apple way. Tang Tan is the person who knew that way better than almost anyone still in the industry.
The structural irony is almost perfect. Apple depends on OpenAI models for on-device intelligence it cannot yet build in-house. OpenAI depends on Apple veterans for hardware expertise it cannot grow from scratch. Each company is getting something from the other. The difference is that Apple side of the ledger is distribution — exposure to hundreds of millions of users — while OpenAI side is institutional knowledge that walks out the door and does not come back.
Apple response — out-of-cycle bonuses that Bloomberg describes as rare for the company — is a blunt instrument. It signals that leadership recognizes the scale of the problem. Whether it changes the trajectory is another question. The engineers being targeted are not leaving for more money alone. Tang Tan mandate at OpenAI is to build AI-native hardware: devices designed around language models as a primary interface, not devices onto which AI features are bolted. For hardware engineers who spent their careers optimizing bezels and camera modules, that project has a pull that a bonus cannot easily replicate.
Tang job at OpenAI is not to iterate the iPhone. It is to answer a harder question: what does a device look like when the AI is the product, not a feature? That is a genuinely open problem in consumer hardware, and the people best equipped to think about it are the ones who spent two decades making the current default device as good as it could be. OpenAI acquired that capacity through io. It is now extending it through the people who built the original.
Apple announced iPhone 17 in September 2025 (apple.com/newsroom/2025/09/apple-debuts-iphone-17/), a product cycle now running concurrent with this talent war on both sides. Apple can write checks. The question is whether its hardware culture — built over decades around a particular philosophy of industrial design and manufacturing discipline — can survive a sustained talent outflow toward a competitor with different constraints, different ambitions, and the same checkbook. The bonuses buy time. They do not answer the question OpenAI is asking.