Intel has lost its contract for Sony's PlayStation 6 - due to cost and backwards compatibility

According to Reuters, in 2022, Intel lost the contract to design and manufacture the chip for the Sony PlayStation 6. This was a significant blow to the company's contract manufacturing division.

Sony's consoles have sold over 100 million units in a span of fifteen years. For chip developers, the console market may yield lower profits compared to, for instance, artificial intelligence chips, but it represents a stable long-term business built on previously developed technologies. Collaboration with Sony would have been beneficial for Intel, especially as the company currently struggles to secure new large clients for its contract manufacturing.

By that time, Intel and AMD were the final contenders in Sony's bidding process. Sources indicate that Intel could not reach an agreement with Sony regarding the pricing of chips for the new PlayStation. Discussions between Sony and Intel persisted for months in 2022, involving meetings among the CEOs of both companies, along with dozens of engineers and executives.

Additionally, the chip architecture for Sony's consoles typically ensures compatibility with previous versions to allow older games to run on new hardware. According to sources, the transition from AMD to Intel processors posed risks regarding backward compatibility, a concern that was addressed in discussions between the engineers and executives of both companies. Ensuring backward compatibility with earlier PlayStation versions would have been costly for Intel and would have demanded considerable engineering resources.

Intel has already responded to Reuters' reports, particularly regarding the issues of contract chip manufacturing. A company representative stated: “We strongly disagree with this characterization, but we do not intend to comment on any existing or potential negotiations with clients. We have a very healthy customer base in both our product and lithography businesses, and we are fully focused on innovation to meet their needs.”

Sony and Broadcom, which the agency also reported participated in the bidding, did not respond to requests for comments. AMD declined to comment.