Intel has lost a contract to design and fabricate the chip for Sony's upcoming PlayStation 6, according to a recent report by Reuters. The report states Intel had been in direct competition with Advanced Micro Devices (AMD) for the deal, which could have generated billions of dollars in revenue.

The deal, which dates back to 2022, would have seen Intel design and produce the PlayStation 6 chip, while Taiwan Semiconductor Manufacturing Company (TSMC) would handle the fabrication. Had Intel secured the contract, it would have represented a major win for the company's foundry business - one of the key elements in Intel CEO Pat Gelsinger's broader strategy to revitalise the company. Intel's foundry unit was formally launched this year as part of Gelsinger's turnaround plan, with a goal of positioning the company as a competitor to established chipmakers like TSMC and Samsung.

As per the report, a disagreement over pricing ultimately cost Intel the contract. Negotiations between Intel and Sony reportedly broke down due to disputes over profit margins, leaving AMD as the last company standing. AMD, which has supplied chips for Sony's PlayStation 5, was able to outbid its rival and secure the deal.

Sony consoles typically sell over 100 million units across half a decade. While margins on console chips are lower than those for high-end products such as artificial intelligence chips, the business offers reliable and consistent revenue. The competition between Intel and AMD had been fierce, involving months of talks in 2022, multiple meetings between CEOs, executives, and engineers from both companies, as per the report.

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