The proposal was rejected in part because the new entities might still have needed to be consolidated on OpenAI's balance sheet
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OpenAI CEO Sam Altman discussed spinning out the company's robotics and consumer-hardware divisions late last year, a move that would have allowed each unit to raise outside funding and operate with greater independence from the core business, according to The Wall Street Journal.
Ultimately, the plan went nowhere. Among the reasons it failed was a determination by OpenAI that the newly separated units would likely still need to appear on the parent company's balance sheet, The Journal reported.
The two divisions in question already function with significant autonomy, answering directly to Altman rather than to the broader organizational structure. People inside the company have likened them to independent startups that happen to sit under OpenAI's roof, The Journal noted.
OpenAI could revisit the idea in the future, according to The Journal. Among the possibilities being weighed is a restructuring modeled on how Google $GOOGL reorganized itself under Alphabet in 2015, when it placed its dominant search operations alongside more experimental ventures — including a self-driving car project and a life-sciences arm — under a single parent entity. That structure allows investors to evaluate the core business against more speculative investments on separate financial terms.
The consumer-hardware effort took shape last May after OpenAI spent $6.5 billion in stock to bring io — the AI company associated with former Apple $AAPL designer Jony Ive — into the fold. Altman has offered glimpses of what the device will do, describing something small enough for a pocket that maintains constant awareness of its environment; court documents filed this year put the earliest possible customer delivery date at late February 2027.
Robotics is not a new pursuit for the company — OpenAI has pursued work in that field for several years — and it formalized a research collaboration with Coco Robotics, a robot delivery startup, in 2024. "We're trying to figure out how to be very successful at robotics," Altman said on the Core Memory podcast last month.
The spinoff discussions reflect broader pressure on OpenAI to sharpen its focus as it moves toward a potential IPO. The company has missed internal targets for both revenue and user growth, with CFO Sarah Friar warning colleagues that sluggish revenue growth could limit the company's ability to honor its data center commitments. OpenAI has also shut down its standalone Sora video app and narrowed its product strategy around coding tools and enterprise customers.
OpenAI recently closed a $122 billion funding round at a post-money valuation of $852 billion — which the company described as the largest in Silicon Valley history — with an IPO expected by the end of the year, according to The Wall Street Journal.
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