Consoles are bad business for SoC manufacturers
Nvidia had the Sony deal in 2006 with PlayStation 3 before AMD got in and secured the PlayStation 4 in 2013. Nvidia let the PlayStation deal go to AMD with PlayStation 4 and now 5 simply as Jensen doesn’t like to do a low-margin product. High volumes and low margins are part of the reason why Nvidia exited the mobile market (Nvidia was hard to compete here) and only stayed in more margin-rich parts of the automotive business such as ASAD / self-driving.
Reuters does mention that consoles have much lower margins than the chip industry usual but quotes the steady income.
Console SoCs are very low-margin
AMD likes to quote the market share numbers at the cost of making chips are very low margins and trying to make it up with a volume. That is what the console business is all about. Nvidia still holds the Nintendo deal but managed to negotiate much better margins compared to what Sony is paying for the PlayStation chip. Console is a good business for Sony / Microsoft / Nintendo who make up low margins by selling their titles for more compared to the PC.
Intel would love to manufacture a PS6 chip
For Intel, it would make a lot of sense to manufacture the PlayStation 6 chips in its own fabs and not design them. Intel would have to relocate significant resources for Sony.
There is a clear correlation between AMD prioritized Semi-custom deals for Sony and Microsoft for consoles and deterioration in its discrete GPU business. Paul Alcorn Managing Editor of Toms Hardware US has revealed that Jack Huyah AMD's senior vice president and general manager of the Computing and Graphics Business Group confirmed that the company is deprioritizing high-end GPUs.
The story behind this is that AMD doesn’t have the resources or chance to compete with Nvidia in the high end. The bottom line is that even companies like Apple are running out of steam due to a limitation of the TSMC N3 process and that will create a big opportunity for Intel fabs if 18A turns out to be as good as Intel communicates.
