Intel Loses $30 Billion PS6 Chip Design Contract to AMD

Recent reports indicate that Intel has lost its bid to design and manufacture chips for Sony's upcoming PlayStation 6 (PS6), with AMD emerging as the winner. According to insider sources, Intel and AMD were the final contenders for this significant contract.

This setback is a considerable blow to Intel's Intel Foundry Services (IFS), which was banking on this $30 billion contract. AMD, along with TSMC and its stakeholders, stands to benefit greatly from this deal.

Sources reveal that the bidding process for the PS6 chip began sometime in 2022, with Intel's foundry division competing against AMD and TSMC after Broadcom was sidelined. Winning this lucrative contract could have significantly propelled Intel's growth, particularly for its newly established foundry services. Conversely, had Intel secured the contract, it could have drastically affected AMD's prospects.

Interestingly, Intel's failure has been attributed to disagreements over profit margins. Reports suggest that Intel was unable to reach an agreement with Sony on the per-chip profit margin. Given that Sony typically sells a substantial number of consoles—sometimes as many as 100 million units per generation—lower profit margins are not uncommon. Previous PS chip suppliers have preferred stable, reliable income over several years, even if it meant accepting lower margins. For Intel, establishing a functioning foundry operation was likely a critical consideration.

An Intel spokesperson responded to these reports, stating that they "strongly oppose this assertion," but declined to comment further on discussions with clients. AMD and Sony have not provided comments on the matter.

Intel is currently facing significant challenges, including a major restructuring and the largest layoff plan in its 56-year history. Securing the PS6 contract in 2022 would have provided a stable revenue source for the company in the coming years.

Sony is not expected to launch the PS6 until 2027, and it now appears that the console will be based on AMD's processor architecture, allowing both AMD and TSMC to benefit from the anticipated steady revenue. Recently, Sony announced the PS5 Pro, set to release in November at a price of $699.99.