Intel Losing PS6 Chip Deal Due To Revenue Dispute, Backwards Compatibility Risk

New details of a recent Reuters report have revealed how Advanced Micro Devices (AMD), a chip manufacturer, secured a multi-billion dollar deal with the Japanese corporation Sony over Intel to "design and fabricate" chips for the company's next PlayStation console. Reuters is reporting that Intel's bid failed during negotiations between its engineers and Sony executives in 2022, and this huge loss of business with Sony is estimated to have lost "$30 billion in revenue."

AMD and Intel were at loggerheads over the Sony/PlayStation chip contract; if Intel had won, it would have greatly benefited their design and manufacturing businesses. The report stated that the deal "originated" from Intel's "design segment," which, if they had won, the contract would have bolstered their design and "manufacturing business."

As stated by Reuters recently, Intel lost the PS6 console chip deal after a "dispute" over profit margins between them and Sony. Sources who provided information to Reuters revealed "how much profit Intel stood to take from each chip sold" had both the tech company and Sony in constant disagreement, thus preventing Intel from securing the deal.

But the profit margins weren't the only aspect, as it's being reported that a key area of the chip's design for consoles was to guarantee "compatibility with earlier versions of the system," which the sources stated "would have been costly and taken engineering resources." They added that should Sony have switched from AMD, who had produced the PS5 console chip, "to Intel would have risked backwards compatibility" and was a central talking point between Intel and Sony during their 2022 discussions.

An Intel representative supplied a statement in response to Reuters' recent report on the PlayStation 6 chip deal: "We strongly disagree with this characterization but are not going to comment about any current or potential customer conversations. We have a very healthy customer pipeline across both our product and foundry business, and we are squarely focused on innovating to meet their needs."