Intel Fails to Secure $30 Billion PlayStation 6 Chip Contract

Intel Corporation has reportedly missed out on the opportunity to supply chips for Sony’s upcoming next-generation console, PlayStation 6. Sources familiar with the situation indicated that Intel engaged in discussions with Sony for several months in 2022 to create and produce the semiconductor components necessary for the PlayStation 6.

Securing this contract would have been immensely significant for Intel. The deal would have ensured that Intel’s manufacturing facilities remained busy for a minimum of five years, with projected revenues from the contract reaching approximately $30 billion during that period. This potential loss is particularly critical as Intel aims to expand its contract manufacturing division and attract substantial clients to utilize its advanced chip fabrication plants.

Instead, AMD was chosen to design the chips for the PlayStation 6, continuing its longstanding partnership with Sony that dates back to the PlayStation 4. While AMD is responsible for the chip design, TSMC will manage the actual production, following the established industry model where chip design and fabrication are distinct processes.

Reports suggest that discussions between Intel and Sony faltered primarily due to unresolved differences regarding profit-sharing between the two companies. Additionally, concerns regarding backward compatibility for PlayStation games emerged, necessitating that Intel invest significantly in a processor capable of fulfilling Sony’s demands. These challenges were among the key reasons why negotiations ended without a finalized agreement.

The loss of this opportunity with Sony, coupled with other setbacks, has intensified the difficulties confronting Intel’s leadership. The technology giant recently experienced the sudden exit of board member Lip-Bu Tan, prompted by disagreements over the company’s strategic direction. Following multi-billion dollar losses in its manufacturing sector, Intel executives are currently contemplating potential divestitures and organizational restructuring.

Winning the PlayStation 6 chip contract could have provided Intel with a much-needed advantage. However, the discussions with Sony evidently collapsed due to conflicts related to financial agreements and technical specifications.

Source: Reuters

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