AMD, Microsoft: Next-gen SoC supply will be 'tight' until mid-2021

AMD and Microsoft warn consumers that console supply will remain scarce for the first half of 2021.

Recent earnings calls underline frustrating news for consumers: It won't be any easier to find a next-gen Xbox Series X or Series S console until the second half of the year. Both AMD and Microsoft say they expect supply to be constrained throughout the first six months of 2021. AMD, who makes the custom 7nm SoCs that power the next-gen Xbox and PlayStation 5 consoles, asserts that SoC demand in 2020 went beyond the company's initial expectations, and that fabrication plants need to boost production to meet the demand. AMD expects to see "tightness" in 1H 2021, but capacity will fill out in 2H 2021 as production ramps up.

As a result, Microsoft forecasts tighter availability as demand continues to outpace console supply. Without the SoCs from AMD, Microsoft can't produce its new Xbox Series hardware.

"In Gaming, we expect continued strong engagement on the Xbox platform and significant demand for the Xbox Series X and S that will still be constrained by supply,"Microsoft CEO Satya Nadella said in a recent Q2'21 earnings call.

Microsoft saw "console demand that significantly exceeded supply following the Xbox Series X and S launches," Nadella said.

Here's what AMD's Dr. Lisa Su said about the supply shortages:

When I look at the semiconductor environment in 2020, it was very strong. So we saw a strong revenue ramp in our business as well as across some of our peers. It's fair to say that the overall demand exceeded our planning. And as a result, we did have some supply constraints as we ended the year. Those were primarily, I would say, in the PC market, the low-end of the PC market and in the gaming markets.

That being said, I think we're getting great support from our manufacturing partners. The industry does need to increase the overall capacity levels. And so we do see some tightness through the first half of the year, but there's added capacity in the second half.

And then as in terms of how we think about these things. So for our full year annual guide, we do have good visibility on both the demand side and the supply side. And that was the basis for the guidance across the businesses.