(CNN) — Apple has sued OpenAI, accusing the artificial intelligence company of stealing trade secrets from the iPhone maker to help develop its own undisclosed AI-powered devices.

The lawsuit, filed on Friday in the US District Court for the Northern District of California, accuses OpenAI of trade secret misappropriation and breach of contract.

The legal action comes after OpenAI announced last year that it was working with Apple’s former design chief on a confidential project to develop devices aimed at bringing consumers into the next era of artificial intelligence.

The device is expected to be unveiled later this year, but the lawsuit could disrupt those plans. It could also complicate OpenAI’s reported preparations for a major initial public offering (IPO).

OpenAI spokesperson Drew Pusateri rejected the allegations.

“We have no interest in other companies’ trade secrets,” Pusateri said. “We remain focused on building innovative technology that empowers people everywhere.”

The lawsuit names OpenAI, former Apple engineer Chang Liu, OpenAI hardware chief Tang Tan, and io Products, the company founded by former Apple design chief Jony Ive. Ive, who helped shape the development of the iPhone, is not named as a defendant and has not been accused of wrongdoing.

OpenAI acquired io last year.

Apple alleges that Liu and Tan played key roles in the alleged theft of confidential information.

According to the lawsuit, Liu left Apple to join OpenAI in January 2026 and failed to complete steps requested by Apple, including signing a confidentiality reminder, attending an exit interview and confirming the return of company devices.

Apple claims Liu retained a work-issued laptop and accessed a former colleague’s computer after leaving the company.

The lawsuit alleges that Liu downloaded “dozens of Apple’s confidential hardware-related files”, including information about unreleased products, engineering presentations, technical specifications and proprietary project data.

Apple also alleges that Tan used confidential company information while recruiting employees, including instructing candidates to bring Apple components during interviews. The company further claims that Tan and OpenAI advised Apple employees on how to leave the company.

Tan is also accused of sharing details about meetings with Apple suppliers and emailing himself supplier information before departing Apple.

The lawsuit claims Apple found evidence that other former employees took confidential information with them when they joined OpenAI.

“At Apple, our teams are constantly developing breakthrough technologies to create the best products and services in the world, and protecting their work and intellectual property is something we take very seriously,” the company said in a statement.

Apple said it raised its concerns with OpenAI while its investigation was still ongoing but received no response.

The lawsuit marks a significant deterioration in the relationship between the two companies, which announced a partnership in 2024 to integrate ChatGPT into Apple products.

The dispute comes amid growing competition between technology companies seeking to dominate the future of artificial intelligence.

OpenAI has been recruiting senior Apple engineers and executives as it builds a dedicated hardware division. According to a CNN review of LinkedIn profiles, at least 10 engineers have recently moved from Apple to OpenAI.

Meanwhile, Apple is preparing to launch an updated version of Siri later this year, with new capabilities allowing it to work across apps and provide more personalised responses using information from a user’s iPhone.

OpenAI has revealed few details about its secretive hardware project. Reports have suggested the company is developing a smart speaker, while other reports indicate the device could be designed to understand a user’s surroundings.

The race reflects a broader shift in technology, as companies compete to create AI tools capable of handling everyday tasks and potentially reducing consumers’ reliance on traditional apps and screens.