AMD: Xbox One deal worth over $3 Billion

[Vesku]

Don't know where you got that from? The current XCGPU for the 360 is manufactured by GloFo.

Really? http://www.xbitlabs.com/news/multimedia/display/20070821041622.html

"Microsoft Xbox 360’s Graphics Chips Now Fully Made at TSMC.

TSMC to Substitute NEC in Xbox 360’s Graphics Sub-System
[08/21/2007 04:16 AM]"

You have sources for that GloFo assertion?

 

[ams23]

http://uk.gamespot.com/news/xbox-one-deal-with-amd-costs-over-3-billion-6408926

$600 million per year on the Xbox One alone seems like a lot of welcome money for AMD.

The $3 billion revenue is likely derived from an estimate of 30 million Xbox One consoles sold over the next five years * an estimate of $100 revenue for each APU. The question is, what is the estimated production cost of each 5+ billion transistor APU? As others have suggested in this thread, the profit margin may not be so great, but still nice to have a reasonably steady stream of revenue over the next few years. The bigger concern is the disproportionate amount of revenue coming from the console space relative to the faster growing mobile space, and what was given up or pushed back when devoting so much resources to consoles.

 

[itsmydamnation]

30 million for world wide sales for 5 years would be very poor.

 

[TerryMathews]

Only true if GF is making either of these APUs, Microsoft has been dealing with TSMC up until now.

http://www.anandtech.com/show/6972/xbox-one-hardware-compared-to-playstation-4/2 says 28nm. If it were TSMC, why wouldn't it be at 20nm?

 

[Vesku]

http://www.anandtech.com/show/6972/xbox-one-hardware-compared-to-playstation-4/2 says 28nm. If it were TSMC, why wouldn't it be at 20nm?

1. Current AMD Jaguar APUs, basis for the consoles, is at 28nm TSMC

2. Cost

3. Time to market

 

[NTMBK]

Really? http://www.xbitlabs.com/news/multimedia/display/20070821041622.html

"Microsoft Xbox 360’s Graphics Chips Now Fully Made at TSMC.

TSMC to Substitute NEC in Xbox 360’s Graphics Sub-System
[08/21/2007 04:16 AM]"

You have sources for that GloFo assertion?

That is the graphics chip from the old, two chip solution- that is why I said "current". http://arstechnica.com/gaming/2010/08/microsoft-beats-intel-amd-to-market-with-cpugpu-combo-chip/ The single chip 45nm shrink is Global Foundries.

EDIT: Also http://www.anandtech.com/show/3774/welcome-to-valhalla-inside-the-new-250gb-xbox-360-slim

 

[NTMBK]

1. Current AMD Jaguar APUs, basis for the consoles, is at 28nm TSMC

2. Cost

3. Time to market

Jaguar is made to be very easy to port between processes. Going with GloFo also means that they can use the other common platform foundries (e.g. IBM) as a second source.

 

[Vesku]

That is the graphics chip from the old, two chip solution- that is why I said "current". http://arstechnica.com/gaming/2010/08/microsoft-beats-intel-amd-to-market-with-cpugpu-combo-chip/ The single chip 45nm shrink is Global Foundries.

EDIT: Also http://www.anandtech.com/show/3774/welcome-to-valhalla-inside-the-new-250gb-xbox-360-slim

Ah, so a couple of years using GF for the SoC version. So it's possible we could see the PS4 made by TSMC and the Xbox One made at GF.

 

[ams23]

30 million for world wide sales for 5 years would be very poor.

Unfortunately I do believe that this is a realistic sales estimate due in part to the ever growing popularity of mobile handheld computing devices.

 

[gorobei]

Really? http://www.xbitlabs.com/news/multimedia/display/20070821041622.html

"Microsoft Xbox 360’s Graphics Chips Now Fully Made at TSMC.

TSMC to Substitute NEC in Xbox 360’s Graphics Sub-System
[08/21/2007 04:16 AM]"

You have sources for that GloFo assertion?

your link just say that tsmc is making the embeded ram for the older chip.

ntmbk's anand link, ars tech say chartered(under GF)
pcper also lists chartered/GF.
http://www.pcper.com/reviews/General-Tech/New-Xbox-360-S-Slim-Teardown-Opened-and-Tested/new-chips



also, i cant remember what tech site i read it on but it may have been a press release or interview quote from someone from AMD that indicated they would be making jaguar cores in general at both GF and TSMC after spending time/money to specifically be able to do so. cant remember if this also specifically referred to the apu used in xbone or ps4.

 

[Vesku]

As stated, my guess is PS4 chip at TSMC and Xbox One chip from GF.

 

[TerryMathews]

As stated, my guess is PS4 chip at TSMC and Xbox One chip from GF.

Which means my original point was correct, even if it's a 0% margin, it will still offset those penalties.

 

[lefty2]

http://uk.gamespot.com/news/xbox-one-deal-with-amd-costs-over-3-billion-6408926

$600 million per year on the Xbox One alone seems like a lot of welcome money for AMD.

Other estimates are more conservative.

"We estimate that average selling prices for the company's game console business are roughly $60 due to its premium specifications. As a result, we are adding roughly $96 million of Sony/Xbox console chip revenue for AMD in Q3 2013 and $228 million in Q4 2013"

http://www.xbitlabs.com/news/multim...to_Hit_Around_5_Million_in_Total_in_2013.html

 

[Roland00Address]

Other estimates are more conservative.

"We estimate that average selling prices for the company's game console business are roughly $60 due to its premium specifications. As a result, we are adding roughly $96 million of Sony/Xbox console chip revenue for AMD in Q3 2013 and $228 million in Q4 2013"

http://www.xbitlabs.com/news/multim...to_Hit_Around_5_Million_in_Total_in_2013.html

324 million over two quarters is about 1/2 of 600 million which was the yearly projection.

Yes you will sell more consoles during the christmas season (q4) but my point is everyone is roughly saying the xbox revenue is going to be in the same ballpark. No one is stating AMD is going to make double or triple the revenue compared to another analyst.

We won't really know how much revenue AMD will make till we see sell numbers for the console, and we won't have a year worth of sales numbers till a little less than 18 months from now.

 

[Dribble]

It's $600m revenue, not profit. Profit isn't going to be great as I can' believe MS will have given AMD anything but a wafer thin profit margin. That said Terry is right, if it's made at GloFo it might be enough to save them from being hit by that min production clause again which is worth a lot to AMD considering how much it cost them last time.

 

[lefty2]

324 million over two quarters is about 1/2 of 600 million which was the yearly projection.

Yes you will sell more consoles during the christmas season (q4) but my point is everyone is roughly saying the xbox revenue is going to be in the same ballpark. No one is stating AMD is going to make double or triple the revenue compared to another analyst.

We won't really know how much revenue AMD will make till we see sell numbers for the console, and we won't have a year worth of sales numbers till a little less than 18 months from now.

It's $228 million for *combined* sales of both playstation and xbox one in Q4. Do the maths and you get a figure much less than $600 million

 

[Khato]

Considering they are having to pay GF for CPUs they aren't making, I'd say this deal will book as a net gain even with $0 margin as it will negate the penalties they are paying out today.

Depends upon the specifics of the WSA and whether or not Microsoft is departing from the typical arrangement of buying a design and paying royalties for its use, not chips. I believe the original xbox was the last time that a major console bought chips instead of a design... and that didn't work out so well for Microsoft because they were then tied to a static cost for the life of the console as Intel wasn't going to do a node change for them.

So if Microsoft is going with the typical model of getting the chips fabricated themselves instead of buying them from AMD then it's quite unlikely that it would have any effect whatsoever upon AMD's WSA with GF.

 

[SiliconWars]

Other estimates are more conservative.

"We estimate that average selling prices for the company's game console business are roughly $60 due to its premium specifications. As a result, we are adding roughly $96 million of Sony/Xbox console chip revenue for AMD in Q3 2013 and $228 million in Q4 2013"

http://www.xbitlabs.com/news/multim...to_Hit_Around_5_Million_in_Total_in_2013.html

http://seekingalpha.com/article/135...-2013-results-earnings-call-transcript?page=3

We are excited about our semi-custom pipeline and the large opportunity for AMD to deliver semi-custom silicon with ASPs at the higher range of our client offerings

Trinity currently tops out at $130 so I have no idea why they think $60 is the ASP. Try $100 then redo the calculations, then factor in that China is set to unban consoles.

 

[NTMBK]

Depends upon the specifics of the WSA and whether or not Microsoft is departing from the typical arrangement of buying a design and paying royalties for its use, not chips. I believe the original xbox was the last time that a major console bought chips instead of a design... and that didn't work out so well for Microsoft because they were then tied to a static cost for the life of the console as Intel wasn't going to do a node change for them.

So if Microsoft is going with the typical model of getting the chips fabricated themselves instead of buying them from AMD then it's quite unlikely that it would have any effect whatsoever upon AMD's WSA with GF.

Given the x86 licensing issues, they will probably have to buy chips directly from AMD- AMD can't resell x86 based IP to other parties.

Of course, they may have stipulated required die shrinks in the contract to avoid the situation they had with the original XBox.

 

[beginner99]

Considering they are having to pay GF for CPUs they aren't making, I'd say this deal will book as a net gain even with $0 margin as it will negate the penalties they are paying out today.

Reality is this will probably keep AMD away from bankruptcy for a number of years. They'll stop bleeding and get a chance to regroup.

I had the same thought few days back:

http://forums.anandtech.com/showthread.php?p=35050955&highlight=#post35050955

Actually I think thats why AMD got both contracts due to cheap price form low margins.

 

[TerryMathews]

Given the x86 licensing issues, they will probably have to buy chips directly from AMD- AMD can't resell x86 based IP to other parties.

Of course, they may have stipulated required die shrinks in the contract to avoid the situation they had with the original XBox.

Exactly this. AMDs license is not transferable, this has been established and beaten to death.

 

[Khato]

Exactly this. AMDs license is not transferable, this has been established and beaten to death.

But how is it not transferable? Recall that the same was said of AMD's ability to make chips using a third-party foundry a few years back... Last I checked, the full details of the AMD-Intel cross licensing agreement were not in the public domain so how can we establish such?

If we go by the original post of this thread of roughly $600M revenue per year for AMD from the xbox one and couple that with the xbox360 averaging 10M units per year we're left with that roughly $60 per unit figure going to AMD. That definitely implies that they're delivering actual silicon instead of IP since that would be an extremely high IP charge... in which case I'd certainly hope that they're able to fab it at GF to negate any possibility of a WSA charge since $60 per chip would probably be at or below a 30% gross margin.

Edit: Of course, that assumes that the $3B figure is spread over only 5 years. But the source merely says 'multi-year' worth "$3+B" - that could be over 3 years or 10. But if that figure is for the entire lifetime of the xbox one and it surpasses 100M units then you're already down to $30 each... though Microsoft is having fun estimating far higher figures than that due in part to the non-traditional (aka non-gaming) uses for the console. And once you get into those kind of numbers you're definitely talking IP royalties, not silicon.

 

[Vesku]

" In addition, the FTC settlement order will require Intel to:

modify its intellectual property agreements with AMD, Nvidia, and Via so that those companies have more freedom to consider mergers or joint ventures with other companies, without the threat of being sued by Intel for patent infringement;"

http://ftc.gov/opa/2010/08/intel.shtm

 

[TerryMathews]

But how is it not transferable? Recall that the same was said of AMD's ability to make chips using a third-party foundry a few years back... Last I checked, the full details of the AMD-Intel cross licensing agreement were not in the public domain so how can we establish such?

If we go by the figure that originated this thread of roughly $600M revenue per year for AMD from the xbox one and couple that with the xbox360 averaging 10M units per year we're left with that roughly $60 per unit figure going to AMD. That definitely implies that they're delivering actual silicon instead of IP since that would be an extremely high IP charge... in which case I'd certainly hope that they're able to fab it at GF to negate any possibility of a WSA charge since $60 per chip would probably be at or below a 30% gross margin.

http://www.semiaccurate.com/forums/showthread.php?t=6595 discusses it at length. The true story is that no one knows for sure but it seems as though the nontransferable clause is still in effect.

 

[Khato]

http://www.semiaccurate.com/forums/showthread.php?t=6595 discusses it at length. The true story is that no one knows for sure but it seems as though the nontransferable clause is still in effect.

Though that thread is discussing the cross-licensing agreement in terms of a buyout which is not applicable in this case. (As well, it's all just postulation based on the 2001 agreement anyway.)

What really matters is this - even if the current agreement had some clause that would allow Intel to do so, would they attempt to block it on such a technicality as Microsoft/Sony ordering directly from the foundry and paying a royalty instead of having an AMD middle-man? Considering that all they'd accomplish is annoying all parties involved with no real impact since they'd just renegotiate and buy chips from AMD. Not to mention it'd likely draw the ire of governmental regulation.