Intel slips the deal worth $30 billion of making Sony's PlayStation 6 chip

By siliconindia  |  Tuesday, 17 September 2024, 09:06 IST

Intel slips the deal worth $30 billion of making Sony's PlayStation 6 chip
In 2022, Intel missed out on a contract to design and manufacture the chip for Sony’s PlayStation 6, delivering a major setback to its emerging contract manufacturing business.
Intel had been competing with Advanced Micro Devices (AMD) for the chip design and with Taiwan Semiconductor Manufacturing Co (TSMC) for the manufacturing contract. Securing the deal would have generated billions of dollars in revenue and involved producing thousands of silicon wafers each month, according to two sources.
The contract's bidding process came down to the last two competitors, Intel and AMD.
Intel's design division would have achieved a triumph if they secured the Sony PlayStation 6 chip design project, while also bolstering their foundry business - a crucial part of CEO Pat Gelsinger's revitalization strategy for the company. This dual success would have been theirs to cherish!
Plans for Intel to establish a foundry unit were announced by Gelsinger in 2021, and it was officially launched at an event held in San Jose, California this past February. The deal with PlayStation chips had its roots within the design department of Intel but would have greatly impacted the financial success of their newly separated foundry business moving forward.
For the first time, this report divulges information on the talks and reasons behind Intel's failure to secure a contract for Sony's upcoming next-gen gaming console.
Sony typically sells over 100 million consoles in five years. While the console market is less profitable than AI chips, it still offers steady business and the chance to leverage existing expertise. Partnering with Sony could have boosted Intel's struggling contract manufacturing division.
Intel's talks with Sony stalled over profit margin disputes, leading AMD to win the contract through a competitive bidding process that narrowed the competition down to just Intel and AMD.
According to the sources,in 2022, discussions between Sony and Intel spanned several months and involved meetings between the CEOs, along with numerous engineers and executives from both companies.
Sony announced the PlayStation 5 Pro but hasn’t revealed the next-gen console. It sold 20.8 million PS5 units in fiscal 2023. Like other tech giants, Sony relies on contractors for chip design. Switching from AMD, which made the PS5 chip, to Intel raised concerns about backward compatibility, a key issue in discussions.
Under CEO Pat Gelsinger, Intel separated its design and manufacturing operations and has reported them independently since early this year. In April, Intel revealed $7 billion in operating losses for its manufacturing division.
The souces revealed that,the company has struggled to secure a high-profile customer for its new 18A manufacturing process. Winning the PlayStation 6 chip could have kept Intel's foundry unit busy for over five years.
According to two sources, an extended agreement with Sony could have significantly boosted Intel's contract manufacturing initiative by attracting major clients. This comes as Intel faces challenges in enticing customers towards its advanced 18A process technology.

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