Microsoft and AMD Team Up to Power Next-Gen Xbox with Advanced Graphics and AI

On June 17, 2025, Microsoft announced a strategic, multi-year partnership with AMD to co-develop silicon for a range of devices, including the upcoming Xbox consoles. According to Sarah Bond, President of Xbox, this collaboration will enhance visual quality, deliver more immersive gameplay, and integrate AI-powered experiences. The new platform will cater to players, not confining them to a specific store or device, and will maintain full compatibility with the current Xbox game library. This announcement comes as no surprise, given AMD's history with Xbox. The semiconductor company has partnered with Microsoft on the last two generations of gaming consoles, and developing a new console typically takes several years. This agreement likely means that Microsoft is working on a custom design for its flagship next-generation console. Additionally, the partnership may extend to Windows-related hardware and the recently unveiled Asus ROG Xbox Ally and Asus ROG Xbox Ally X handhelds, both introduced at the Summer Game Fest. With both Microsoft and Sony actively working on their next-gen consoles, neither company aims to fall behind the recent launch of the Nintendo Switch 2, which hit the market on June 5, 2025. Historically, Xbox's primary competitor has been Sony, and it remains to be seen whether both will launch their new systems in the same year, as they did in 2020. Microsoft emphasizes its commitment to AMD to power the next wave of gaming experiences across various platforms, including consoles, PCs, handheld devices, and cloud services. The collaboration aims to elevate the player experience through advanced graphics, heightened visual fidelity, and AI-driven features, all while ensuring that existing games remain playable on the new console. This move aligns with Xbox's broader strategy to make Windows the top platform for gaming. AMD's competitive edge over rivals like Nvidia and Intel lies in its chip design, which integrates both processor and graphics functions into a single package. This integrated approach has made AMD's architecture highly appealing to console developers. Consequently, both Microsoft and Sony have relied on AMD for their previous two console generations, making it challenging for other chip manufacturers to break into this market segment. In contrast, Nintendo has preferred Nvidia's chips for both the Switch and the Switch 2. As the industry gears up for another console war, this marks the fifth generation of Xbox consoles I've covered, underscoring the ongoing evolution and competition in the gaming hardware sector. The partnership between Microsoft and AMD represents a significant step forward in advancing gaming technologies and expanding the ecosystem. By leveraging AMD's expertise, Microsoft aims to create a seamless and versatile gaming experience that appeals to a wide range of players, from console enthusiasts to PC gamers. This collaboration is expected to set the stage for exciting developments in the gaming world, enhancing performance and accessibility across multiple platforms.