According to informed sources, in 2022 Intel has lost the competition to design and produce the chip for the future Sony PlayStation 6. This contract, which could have generated billions of dollars in revenue and the production of thousands of silicon wafers per month, was instead awarded to rival AMD, which will handle the design, and Taiwan Semiconductor Manufacturing Co (TSMC), which will be responsible for manufacturing.
The loss of this contract was a major blow to Intel, especially its design division and its newly formed contract manufacturing business, the centerpiece of CEO Pat Gelsinger’s turnaround plan. Acquiring the PS6 chip project could have provided a major boost to the financial performance of the foundry division, which is currently struggling to find new major customers.
Sony’s PlayStation consoles typically sell more than 100 million units over a five-year period. For a chip designer, the console business offers lower profits than products like artificial intelligence chips, but it’s still a stable business that can benefit from the technology the company has already developed.
According to Reuters sources, Intel was actually on the verge of a deal. So how did the split come about? Money, of course. A disagreement over the profit margin Intel would earn on each chip sold to Sony prevented the two companies from reaching an agreement on price. AMD then won the contract through a competitive bidding process that eliminated other competitors such as Broadcom.
The loss of this contract raises questions about the future of Intel’s strategy in the contract manufacturing sector. Although the company has invested heavily in this division, the difficulty in winning over large customers like Sony highlights the challenges it will face in establishing itself in this highly competitive market. These challenges were also highlighted in the recent meeting between Intel and the United States government on the CHIPS Act.
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