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

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.