Microsoft and AMD Announce Multi-Year Chip Collaboration
Microsoft and AMD have officially announced a multi-year partnership focused on developing custom chips for the next generation of Xbox consoles. This collaboration aims to enhance gaming experiences across both traditional home consoles and the newly introduced handheld devices. The news was shared on Tuesday, with both companies emphasizing their shared vision for pushing technological boundaries in gaming.
Xbox president Sarah Bond highlighted that the partnership will allow developers to create richer visuals and more immersive gameplay using advanced AI technologies. She also confirmed that these innovations would retain full compatibility with players’ existing Xbox game libraries. The custom chips are expected to significantly boost performance and user engagement across Microsoft’s expanding console ecosystem.
Xbox Expands into Handheld Market with New Devices
This announcement comes shortly after Microsoft revealed its new line of handheld gaming devices in collaboration with ASUS. The Xbox Ally and Xbox Ally X, slated for release later this fall, will give gamers the flexibility to access their Xbox library on the go. These handhelds will also support cloud-based game streaming, further integrating Microsoft’s growing Game Pass and cloud gaming services.
The new devices are part of Microsoft’s broader strategy to evolve beyond the traditional home console model. By extending its reach into portable gaming, the company aims to attract a wider audience and strengthen its position in the increasingly competitive gaming industry. Microsoft is also exploring the inclusion of third-party stores on its platforms, beginning with the Ally handheld series, to offer more purchasing and gaming options to users.
Strategic Investments and Market Growth Signal Strong Future
Microsoft’s efforts to broaden its gaming ecosystem align with its recent high-profile acquisitions, such as the $7.5 billion purchase of ZeniMax in 2021. The tech giant has also begun releasing its titles on competing platforms, including Sony’s PlayStation, showcasing a more open and inclusive approach to game distribution.
The company’s Game Pass subscription service, priced between $9.99 and $19.99, continues to be a central element of this strategy. Serving as both a digital storefront and an online service, Game Pass offers significant value to gamers and is poised to benefit from the improved performance that AMD’s custom chips will bring.
AMD is no stranger to console development, having previously worked with both Microsoft and Sony on current-generation console chips. Meanwhile, Nvidia, another major chipmaker, powers Nintendo’s Switch and upcoming Switch 2 handhelds. Microsoft’s gaming division, part of its More Personal Computing segment, generated $13.37 billion in revenue during Q3, with Xbox content and services alone growing by 8% year over year.
With this new chip deal in place, Microsoft and AMD are set to shape the future of gaming by delivering next-level performance, portability, and accessibility across a growing suite of Xbox devices.
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