OpenAI will acquire the AI device startup co-founded by Apple Inc veteran Jony Ive in a nearly $6.5 billion all-stock deal, joining forces with the legendary designer to make a push into hardware.

The purchase - the largest in OpenAI's history - will provide the company with a dedicated unit for developing AI-powered devices. Acquiring the secretive startup, named io, also will secure the services of Ive and other former Apple designers who were behind iconic products such as the iPhone.

"It's a relationship that is going to yield products and products and products," Ive said.

Ive was speaking in a joint interview with OpenAI Chief Executive Officer Sam Altman.

For the British-born designer, the move marks a high-profile return to a consumer technology industry he helped pioneer. Working for years alongside Steve Jobs, he crafted the look and feel of the modern smartphone, in addition to the iPod, iPad and Apple Watch. He left Apple in 2019.

When Ive departed Apple, CEO Tim Cook pitched the idea that the two parties would remain collaborators. But they never released a product together after Ive's exit. And now the designer is embarking on a new collaboration with Altman, who he called a "rare visionary."

Ive was once described by Jobs as his "spiritual partner", and his new stint designing rival technology products could be seen as a bad omen for Apple - a company already struggling to compete in AI. In the interview, Altman said Jobs would be "damn proud" of Ive's latest move.

OpenAI is going to create a product at a level of quality that "has never happened before in consumer hardware," Altman said. "AI is such a big leap forward in terms of what people can do that it needs a new kind of computing form factor to get the maximum potential out of it," he said.

Apple shares dropped as much as 2.3 per cent in New York on Wednesday. They had been down 17 per cent this year through Tuesday's close.

As part of the deal, OpenAI is paying $5 billion in equity for io. The balance of the nearly $6.5 billion stems from a partnership reached in the fourth quarter of last year that involved OpenAI acquiring a 23 per cent stake in io.