Intel lost out on a $30 billion contract to produce chips for the Sony PlayStation 6, losing to AMD

Reuters, citing informed sources, reported today that in 2022, Intel and Sony have been negotiating for several months about the possibility of developing and releasing chips for the PlayStation 6 game console using the former company. This order could load Intel’s contract capacity for a period of five years and provide it with about $30 billion in revenue.

Image Source: Sony

In addition to Intel, Broadcom and AMD competed for the right to produce chips for Sony’s next-generation game console in 2022. The latter eventually received this order, although in fact, according to tradition, it will only undertake to develop the necessary component for Sony, and the Taiwanese company TSMC will produce it. In the case of Intel, it was not only about producing chips for Sony, but also developing them taking into account the latter’s wishes. It was at this stage that the negotiations revealed contradictions between potential partners, as Reuters clarifies.

Maintaining backward compatibility of games for previous generations of Sony consoles meant that Intel would have to spend a lot of resources specifically on developing a processor for the PlayStation 6. Secondly, Sony and Intel could not find a common language when searching for a profit distribution scheme. The release of semi-custom components can bring a moderate profit per unit, but the contract as a whole guarantees predictable cash flows for years to come, so the missed opportunity to cooperate with Sony in this area can be considered a serious loss for Intel. According to some estimates, the implementation of such an order would ensure the production of several thousand silicon wafers with chips every month, and Intel’s total revenue for the entire period of the contract could reach $30 billion. In addition, the very fact of cooperation with Sony would help Intel attract other large contract clients.