Microsoft (MSFT) and AMD (AMD) have officially entered into a multi-year partnership to develop custom chips for the next generation of Xbox consoles, including both in-home and handheld systems.
In a statement, Xbox president Sarah Bond said the collaboration will enable developers “to unlock a deeper level of visual quality and immersive gameplay and player experiences enhanced with the power of AI, all while maintaining compatibility with your existing library of Xbox games.”
The announcement follows Microsoft’s recent unveiling of its new handheld gaming systems, the Xbox Ally and Xbox Ally X, developed in partnership with ASUS. Slated for release this fall, the devices will allow gamers to access their Xbox library on the go and stream titles via the cloud.
These moves align with Microsoft’s broader vision of transforming Xbox from a hardware-focused platform into a far-reaching gaming ecosystem. Central to that effort is the expansion of its Game Pass subscription and cloud gaming services.
Microsoft is making it clearer than ever that its next-gen Xbox platform will be focused on multiple devices and not locked to its own store for games. “This is all about building a gaming platform that’s always with you, so you can play the games you want across devices anywhere you want — delivering you an Xbox experience not locked to a single store or tied to one device,” says Bond. “That’s why we’re working closely with the Windows team to ensure that Windows is the number one platform for gaming.”
To strengthen its gaming portfolio, Microsoft has made several high-profile acquisitions — including the $7.5 billion purchase of ZeniMax in 2021 — and has increasingly made its titles available on competing platforms like Sony’s (SONY) PlayStation.
Microsoft’s Game Pass subscription service, priced between $9.99 and $19.99 depending on the tier, serves as both the company’s digital storefront and online gaming hub.
Looking ahead, Microsoft also plans to bring third-party storefronts to its platforms, starting with the new Ally handhelds.
AMD has a long-standing relationship with console makers, having worked with both Microsoft and Sony on chipsets for their current-generation consoles. In contrast, Nvidia is the chip partner behind Nintendo’s Switch and its upcoming Switch 2.
Microsoft’s gaming business is part of the company’s More Personal Computing division. In Q3, that segment posted $13.37 billion in revenue, with Xbox gaming and content services rising 8% year-over-year.
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