AMD says it's working on custom chips with Microsoft for next-gen Xbox, PCs, and handhelds

AMD has confirmed that it is working on custom chips for future Microsoft Xbox platforms including the next-gen Xbox consoles, PCs, and gaming handhelds.

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During its Q2 2025 earnings call, AMD recorded a huge 71.4% increase in its Client and Gaming business, with this segment including Client (Ryzen CPUs) and Gaming (GPUs, semi-custom SoCs) products. Client revenue leaped by 66% to $2.5 billion, thanks to super-strong Ryzen CPU sales, especially the new Ryzen 9000X3D processors.

In the Gaming segment, revenues increased by an even bigger 83.3% to $1.1 billion, with this segment including graphics products like the RDNA 4-based Radeon RX 9000 series, as well as custom SoCs for gaming consoles and handhelds.

In its own highlights for the Client and Gaming Segment, AMD noted strategic highlights that included "announced a new multi-year collaboration with Microsoft for custom chips that will power the next generation of Xbox devices including consoles, PCs, and handhelds".

We just reported -- you can read more in the link above -- that the next-generation Xbox wouldn't just be fighting the PS6, but instead would see semi-custom APUs from AMD that would power pre-built PCs and gaming handhelds as Xboxes. It's a completely different move for Microsoft, but one that sounds like it would be a winner against Sony.

This means Microsoft would have Xbox inside dozens and dozens of systems at various price points that would range from ultra-low $199 or so, through to a powerful new -- I guess "proper Xbox console" -- at let's say $699, and then far up and above that into thousands of dollars if you want more power/graphics performance, and closer to PC specs.

Microsoft also doesn't need to worry about keeping up with Sony in the console race, as it would be shifting gears and entire markets with its gaming reach. If there are future systems that run Xbox through Windows, the entire PC gaming community benefits, and with Microsoft owning Windows and Xbox, it just makes sense.