PlayStation 5, Xbox Series X chip production ramps up for 2020 launch

Sony and Microsoft put in mass chip orders for next-gen PS5 and Xbox Series X consoles.

@DeekeTweak
Published Mon, May 4 2020 7:06 PM CDT   |   Updated Sat, Aug 8 2020 10:29 AM CDT

AMD is ramping up production of the 7nm custom Navi- and Zen 2-powered SoCs used in next-gen PlayStation 5 and Xbox Series X consoles.

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Both Microsoft and Sony plan to ship their next-gen Xbox Series X and PS5 consoles on time in Holiday 2020, and mass production of each system's custom Zen 2 CPU and Navi GPU-powered SoCs will soon begin to make it happen. In a recent earnings report, AMD CEO Lisa Su confirmed production will start in Q2 2020 (April - June) in preparation for next-gen console launches later this year.

The company expects Q2 revenues to increase as Microsoft and Sony place high-volume chip orders ahead of launch, and then semi-custom earnings to spike further as both companies rev up for 2021 console supply. Sony and Microsoft make the orders 1-2 quarters ahead of time. Hardware availability may be constrained, however: Sony, in particular, plans to ship 5-6 million PlayStation 5 consoles in 2020, down 1-2 million units from the PS4's launch in 2013.

"As expected, semi-custom product revenue was negligible in the quarter, as Sony and Microsoft, both reduced inventory in advance of next-generation console launches. We expect semi-custom revenue to increase in the second quarter and be heavily weighted towards the second-half of the year, as we ramp production to support the holiday launches of the new PlayStation 5 and Xbox Series X consoles," Dr. Su said in a recent earnings call.

"We also expect to see the console gross margins improve as we go through the year. And that's the reason for the full-year guide at 45%. So usually, what happens is in the very first - second quarter is our very first quarter ramp for the consoles, and so the margin starts a little bit lower and continues to ramp as we go through the year."

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Will next-gen consoles be delayed? Probably not. But the games could be.

Microsoft's Phil Spencer has been careful to say that next-gen Xbox hardware is still on track and that games development is disrupted more than hardware, but the Xbox Series X could still be delayed due to inefficient at-home console testing.

Sony has warned its investors that COVID-19 could delay the PlayStation 5, or at the very least, have an impact on first-party games.

AMD is confident in their visibility for next-gen consoles and expects Sony and Microsoft to continue making orders for the chips:

"Console gaming is a positive for us. There's lots of anticipation around the consoles. It's one of the largest launches, I think, of the year. And from that standpoint, there's no change in our view, as it relates to COVID-19 just given what we see today."

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Derek is absorbed with the intersection of technology and gaming, and is always looking forward to new advancements. With over six years in games journalism under his belt, Derek aims to further engage the gaming sector while taking a peek under the tech that powers it. He hopes to one day explore the stars in No Man's Sky with the magic of VR.

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