Intel reportedly lost PlayStation 6 chip design contract to AMD in 2022 — the $30 billion deal was up for grabs

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Intel and IFS battled AMD and TSMC.

Sony sizzle video for the PS5 Pro
(Image credit: Sony)

According to Reuters, Intel seemingly lost out to AMD in its bid to design and fabricate processors for the upcoming Sony PlayStation 6. According to three insiders talking with the source, Intel and AMD were the two final contenders in the PS6 chip design and fabrication tender. 

Intel’s loss was reportedly an excruciating blow to the hopes of its IFS contract manufacturing business (now known as Intel Foundry). The contract, considered worth approximately $30 billion in revenue, will instead feather the nests of rivals AMD and TSMC and their shareholders.

The Reuters sources say that Intel and its foundries division were bidding competitively against AMD and TSMC for the PS6 chip sometime in 2022. The chip design and manufacturing foes, the last contenders with hope for the lucrative contract after Broadcom was sidelined, fought to secure a deal worth as much as $30 billion. Winning this contract would significantly boost Intel, particularly its fledgling IFS division (now Intel Foundry). Conversely, if news of a PlayStation 6 with Intel Inside hit the wires, AMD’s fortunes would have dived.

Interestingly, Intel’s quibbling over profit margins is said to have led to a win by the currently established Sony processor design partner. Reuters sources say Intel locked horns with Sony over the profit margin per chip supplied. However, with the massive volumes of game consoles sold by Sony, sometimes upwards of 100 million per generation, smaller margins are more typical. Suppliers appreciate the steady, reliable income over several years and are usually happy to entertain smaller margins. In Intel’s case, getting its foundry business rolling should or would have been an extra consideration.

An Intel spokesperson responded to the Reuters report, saying they “strongly disagree with this characterization” but wouldn’t (understandably) comment further on customer conversations. AMD and Sony didn’t respond to requests for comment.

Intel is currently experiencing grave difficulties with vast restructuring and some of the biggest layoffs in its 56-year history on the cards. If the firm had landed the Sony PlayStation 6 contract in 2022, it would have had a useful source of recurring revenue for several years. Perhaps we wouldn’t know about it yet, though—and remember, today’s Reuter’s exclusive must be taken with caution, citing unnamed sources and so on.

Sony won’t be ready to launch the PS6 until 2027. Now, it looks like it will be based on AMD’s processor architectures, and both AMD and TSMC will benefit from steady income streams from this product. Sony only revealed its PS5 Pro console a week ago, and it is scheduled for a November release at $699.99.

Mark Tyson
Mark Tyson
News Editor

Mark Tyson is a news editor at Tom's Hardware. He enjoys covering the full breadth of PC tech; from business and semiconductor design to products approaching the edge of reason.

50 Comments Comment from the forums
  • TheSecondPower
    I wouldn't be surprised if AMD makes almost no profit on the PS6 chips. An article the other day said that AMD is focusing on volume over margin. AMD graphics is chiefly focused on getting developer support, and this is one way to do that.

    The contract was made in 2022 though? The PS5 came out in 2020 and console generations are usually around 6 years. They seriously chose the chip 4 years in advance of release?
    Reply
  • DS426
    TheSecondPower said:
    I wouldn't be surprised if AMD makes almost no profit on the PS6 chips. An article the other day said that AMD is focusing on volume over margin. AMD graphics is chiefly focused on getting developer support, and this one way to do that.

    The contract was made in 2022 though? The PS5 came out in 2020 and console generations are usually around 6 years. They seriously chose the chip 4 years in advance of release?
    But doesn't AMD have better net margins than Intel? Such is already strange as obviously AMD's margins from PS and Xbox chip revenue has to be tiny -- maybe low double-digits?

    Either way, unused fab capacity is far worse for Intel than having low margins (at least having money to keep the lights on), so I wonder if it goes back to "the old guard" executives and upper-management who are contributing to Intel's downfall as of lately.
    Reply
  • Giroro
    Nobody's talked about Intel being interested in gaming consoles for maybe over a decade, but then this story comes out a few days after I speculate Microsoft would be seriously considering Intel if they want to rush out a next-gen console and beat PS6 to market.
    That's a weird coincidence.

    I also said it's likely Intel would lose to Qualcomm as a smaller/cheaper/"cuter" Xbox would be a significant reason behind Microsoft's big push for ARM compatibility - so we'll see if they can make ARM good enough at gaming to maintain backward compatibility.
    I don't think Microsoft is willing to compromise on backwards compatibility, which would be the main reason to use Intel. They wouldn't have much choice as a rushed next-box (with a terrible name) would take a pretty convoluted brand and make it even worse.
    Reply
  • bit_user
    The article said:
    The Reuters sources say that Intel and its foundries division were bidding competitively against AMD and TSMC for the PS6 chip sometime in 2022.
    Pfft. If you just think back to the state of Intel's dGPUs in 2022, it's hardly any surprise they lost it! Their GPUs looked good on paper, but woefully underprerformed according to their specs (and they still do, in many cases). You can't prove it was just the drivers that were at fault, until you actually fix the drivers, and that didn't even start happening until late 2022.

    Then again, the article does cite financial disputes as the deal-breaker. However, if Intel had the same kind of GPU track record as AMD, I have to wonder whether it'd have strengthened their hand in the negotiations.

    The article said:
    The chip design and manufacturing foes, the last contenders with hope for the lucrative contract after Broadcom was sidelined
    Again, this is laughable. I can't fathom how Broadcom hoped to compete on the GPU front. The only real contender would've been Nvidia. Since Sony was considering Broadcom, they must apparently be considering an ISA switch to ARM or RISC-V, which would definitely open up the field to include Nvidia (if they even wanted to bid).

    I do sort of doubt PS6 will be backwards compatible with PS4, however. And this is probably due to the GPU ISA, not the CPU. PS4 was GCN-based, and RDNA has (thus far) included GCN backwards compatibility, but at what cost? It wouldn't surprise me for AMD to drop that, in RDNA 4 or 5 (or the subsequent UDNA that AMD recently announced).
    Reply
  • bit_user
    Giroro said:
    Nobody's talked about Intel being interested in gaming consoles for maybe over a decade, but then this story comes out a few days after I speculate Microsoft would be seriously considering Intel if they want to rush out a next-gen console and beat PS6 to market.
    With Intel's dGPU push, at the time, it would've seemed a natural way to try and further monetize those efforts. Also, even back then, there were leaks of upcoming laptop SoCs with huge iGPUs, making it clear that cross-pollination was happening between the dGPUs and iGPUs.
    Reply
  • Notton
    From the consumer perspective, ARM or x86 doesn't matter for a gaming console that has to be plugged into a wall outlet.

    What matters more is how easy it is to develop games on the platform, and for that AMD Zen2 and RDNA3 was something many game devs were familiar with.

    By going with AMD again, transition to a new platform would be simpler, and you most likely retain backwards compatibility.

    If anyone recalls the development hell of consoles switching their processor type between generations, or PC↔Console ports that performed like trash.
    Reply
  • jlake3
    Giroro said:
    Nobody's talked about Intel being interested in gaming consoles for maybe over a decade, but then this story comes out a few days after I speculate Microsoft would be seriously considering Intel if they want to rush out a next-gen console and beat PS6 to market.
    That's a weird coincidence.

    I also said it's likely Intel would lose to Qualcomm as a smaller/cheaper/"cuter" Xbox would be a significant reason behind Microsoft's big push for ARM compatibility - so we'll see if they can make ARM good enough at gaming to maintain backward compatibility.
    I don't think Microsoft is willing to compromise on backwards compatibility, which would be the main reason to use Intel. They wouldn't have much choice as a rushed next-box (with a terrible name) would take a pretty convoluted brand and make it even worse.
    There were rumors circulating that Microsoft was considering Intel for the next-gen Xbox back in February of this year, then later that month there were further rumors that the deal had supposedly fallen through. It was not stated in those rumors whether AMD got the contract instead, or if they may be switching to ARM.
    Reply
  • JarredWaltonGPU
    bit_user said:
    With Intel's dGPU push, at the time, it would've seemed a natural way to try and further monetize those efforts. Also, even back then, there were leaks of upcoming laptop SoCs with huge iGPUs, making it clear that cross-pollination was happening between the dGPUs and iGPUs.
    Yeah, given the time frame, I don't see how Sony ever would have really given Intel a serious thought on the hardware side of things. Having Intel fab AMD or Nvidia chips would have been more viable, but even that would be a hard sell. Sony has no need to prop up the US foundry industry.

    In 2022, Intel Arc was just barely out the door and failing to impress. Sony would have been taking a serious gamble in trusting Intel to make something better for PS6 in 2027. There are a lot of people already doubting Intel will keep doing dedicated GPUs. Battlemage needs to be amazing, in other words.
    Reply
  • Giroro
    TheSecondPower said:
    I wouldn't be surprised if AMD makes almost no profit on the PS6 chips. An article the other day said that AMD is focusing on volume over margin. AMD graphics is chiefly focused on getting developer support, and this one way to do that.

    The contract was made in 2022 though? The PS5 came out in 2020 and console generations are usually around 6 years. They seriously chose the chip 4 years in advance of release?

    Choosing who will make the chip isn't the same thing as choosing the chip. Consoles are custom/Semi-custom - which takes a couple years to design and qualify. You have to decide who will design the chip before you can start designing the chip. Then you have to get "close enough" dev-kits together and give developers time to make launch titles, which is another couple years.

    *Alternatively* 2022 could have also been a reasonable timeline for an iteration of current hardware. As a random example, If Sony wanted to release some kind of giant, overpriced, feature-stripped PS5 "Pro" for drunk college kids who blame the console itself as the reason their $150 copy of Madden looks and plays like free-to-play crap.

    I would expect next gen as to start 2026 at the absolute earliest if Microsoft is smart and tries to end this generation ASAP, with PS6 coming later, maybe even 2028. PlayStation is comfortably in the lead for hardware sales, and AMD just doesn't look like they have any big ideas in the pipeline to provide a meaningful or transformative "next gen" experience in the next couple years - so I expect Sony will drag out this generation as long as they can.
    Reply
  • umeng2002_2
    From a business perspective, Intel and nVidia are made for each other.
    Reply