Originally Posted by WorldExclusive
The difference here is that they're obligated to provide chips for years into the future. If their financial outlook changes and need to switch their focus, they can't.
AMD could be providing chips for the sake of prodiving chips in the end. I can see why Nv didn't want to go that route.
That's not usually how console chips work, but its possible since as the author mentions, they probably cant license away a x86 chip because x86 is not theirs to license. But assuming they can somehow workaround it in league with Intel, they just design it and license the design to Sony/MS.
The reason this can be preferable for Sony/MS is that Sony and MS are committing to their designs for a long time. As semi process improves over the years, the cost per chip in order to make a chip that is at the same performance level goes down (another way to look at Moore's law). If AMD made the chips, they'd get the benefits of these cost reductions over the years, making more and more profit. Meanwhile MS/Sony would still be contractually obligated to pay the same price per chip.
So usually Sony and MS want to be responsible for getting the chips manufactured so they can be the ones to benefit from process improvements, and lower their chip production cost. Also, this way they can time process shrinks for what works for them and their schedules/inventories and mitigate risk.
In this way, for AMD, all the investment is NRE (non-refundable engineering) and is upfront, with likely little to no cost later... Pure profit... But much lower profit per chip than if they made the thing and sold it.Edited by Seven7h - 3/4/13 at 12:20am