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Advanced Micro Devices will receive from $60 to $100 per every next-generation video game system from Microsoft Corp. and Sony Corp. and will likely make quite a lot of money even in case the new PlayStation 4 and Xbox One game consoles will not be as successful as current-generation consoles.

Financial analysts believe that AMD will get from $60 to $100 for every accelerated processing unit containing eight x86 general-purpose cores as well as Radeon HD graphics engines designed for Microsoft Xbox One and Sony PlayStation 4. Mark Lipacis, an analyst with Jefferies & Co., thinks that the average price of a console SoC will be between $60 and $80; Hans Mosesmann with Raymond James is a little bit more optimistic and believes that the company will get from $60 to $90 per chip.

“Our analysis assumes that this generation of consoles ramps up at 60-90% of the previous model, with average selling prices (ASPs) varying from $60-100,” said Mr. Mosesmann.

Both analysts are actually extremely conservative about pricing per system-on-chip early in the cycle since both Microsoft and Sony are used to pay vast amounts of money for hardware in the beginning of their console’s lifecycles. For example, back in 2005 Microsoft spent around $105 on custom triple-core IBM Power chip in Xbox 360 as well as around $140 on ATI R500 graphics sub-system. Sony initially paid $89 for the Cell processor and $129 got Nvidia RSX graphics engine inside the PS3. Keeping in mind that the AMD chips inside the PS4 and Xbox One feature eight x86 cores, advanced graphics adapter, sophisticated memory controller as well as plethora of custom logic, it is illogical to charge for them less than AMD charges for its mainstream APUs that hardly offer similar performance in games. As a result, the price that AMD should be getting will likely be north from $100 in at least 2013 – 2014 timeframe.

But even at $60 to $90 AMD should make a good money, assuming high demand for the consoles and good yield of the chips.

“While console sell-through in 2014 is up for debate, we note that both the previous generation console systems (PlayStation 3 and Xbox 360) sold ~9 million in units in their first full calendar year. We suspect that competition from set-top boxes, streaming devices, and tablet/mobile gaming may pressure growth of console systems vs. prior years, but we still believe the installed base for next gen consoles is well into the double-digit millions. Our analysis assumes that this generation of consoles ramps up at 60% to 90% of the previous model, with average selling prices (ASPs) [per AMD APU] varying from $60 to $100. The mid-point of our analysis suggests a $1.06 billion contribution from consoles in 2014,” said Hans Mosesmann.

Tags: Microsoft, Xbox One, Xbox, AMD, Jaguar, Radeon, ATI, GCN, Sony, Playstation, PlayStation 4, Business

Discussion

Comments currently: 14
Discussion started: 05/29/13 02:59:04 PM
Latest comment: 06/11/13 04:10:38 AM
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[1-6]

1. 
Even with moderate demand it's projected that AMD will sell 5 million APUs at a minimum to the three console suppliers. At an average selling price of $100 per APU it shouldn't be too difficult to do the math, i.e. a half Billion dollars.

It's all good for consumers and AMD.
6 2 [Posted by: beenthere  | Date: 05/29/13 02:59:04 PM]
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agreed
5 0 [Posted by: mudi1  | Date: 06/11/13 04:06:34 AM]
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2. 
Great AMD, now build an APU with 100 Arm cores, with your GPU IP and unified memory address space, and make it available as PCI based co-processor, for rendering and raytracing!
2 2 [Posted by: BigChiefRunAmok  | Date: 05/29/13 03:46:42 PM]
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but ARM coding is difficult than x86
5 0 [Posted by: mudi1  | Date: 06/11/13 04:07:18 AM]
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3. 
The price in the article seems to be plucked out of the air. Confidential prices will apply and all the hot air written by so called Wall St., analysts are only to increase their turnover in the market. Anything they say is to be taken with a grain of salt.
AMD will make money and with at least 2.5m units in the next years trading, profits should be greatly enhanced. I think that Intel and other chip/graphic makers are kicking themselves for trying to play hard ball with the 3 console makers. These sales should counter the decline in the desktop market to some extent.
4 0 [Posted by: tedstoy  | Date: 05/29/13 06:02:51 PM]
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4. 
Finally AMD is not going to bankrupt soon, well i want that 100$ PS4 chip...
8 2 [Posted by: mudi1  | Date: 05/29/13 07:01:08 PM]
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If you're willing to buy a million chips at a time you could probably get a nice custom AMD APU for some where in the range of $100 a pop.
6 1 [Posted by: beenthere  | Date: 05/29/13 10:10:53 PM]
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Those who hoping for AMD to go bankrupt soon, surely gets disappointed by this news. AMD actually secured the entire gaming market not just consoles.
2 2 [Posted by: tks  | Date: 05/30/13 05:43:37 AM]
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I've replace my GTX 570 by a Radeon 7970 in my gaming comp. the moment I've heard about AMD's deal with Sony and Microsoft. IMO, more and more games will work better with Radeon Graphic hardware & drivers in the months to come.
4 0 [Posted by: MHudon  | Date: 05/30/13 09:03:24 AM]
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u done right also 7970 is much better than 570 also on nvidia u will get cartoonish hair while in 7970 realistic hair thnx to AMD TressFX.
5 0 [Posted by: mudi1  | Date: 06/11/13 04:10:03 AM]
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5. 
Estimates now run from $30 to $100. Who knows? But the most significant thing is that MS and Sony are right behind AMD HSA push (priceless), the biggest innovation since AMD64.
5 2 [Posted by: linuxlowdown  | Date: 05/30/13 03:50:57 AM]
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6. 
now who is saying AMD is going to bankrupt?
5 0 [Posted by: mudi1  | Date: 06/11/13 04:10:38 AM]
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[1-6]

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