Microsoft is doubling down on its Xbox hardware ambitions. The company announced a multi-year partnership with AMD to co-develop custom chips for its next wave of gaming systems — spanning traditional consoles to new handhelds like the Xbox Ally and Ally X.

Xbox president Sarah Bond says the chips will “unlock a deeper level of visual quality and immersive gameplay,” with AI integration set to enhance both performance and personalization — all while preserving backward compatibility with existing Xbox games.

The move expands Microsoft’s strategy to grow beyond the living room console, with cloud gaming, Game Pass, and third-party store access shaping its future. AMD, already a core partner for current-gen Xbox and PlayStation consoles, now reaffirms its role in powering Microsoft’s next-generation push.

Microsoft announced a new multi-year partnership with AMD to co-engineer silicon across multiple devices, including the next generation of Xbox consoles, which will be fully compatible with the existing Xbox game library and won't be tied to a single store.… pic.twitter.com/5TTDf01NlO
— IGN (@IGN) June 17, 2025

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