Microsoft announced a strategic, multi-year agreement with AMD to co-engineer silicon across a portfolio of devices, including the next-generation Xbox consoles.

The company said it will deliver deeper visual quality, immersive gameplay, and AI-powered experiences — grounded in a platform designed for players, not tied to a single store or device, and fully compatible with your existing Xbox game library, said Sarah Bond, president of Xbox.

It’s no surprise, considering AMD has also partnered with Xbox on the two previous generations of game consoles now, and Microsoft is due to start announcing its next generation of hardware. This agreement has probably been in place for a while since it takes multiple years to finalize a console.

In this case, it likely means that Microsoft is working with AMD on a custom design for its main upcoming game console, and it could also use AMD for Windows-related hardware as well as the Asus ROG Xbox Ally and Asus ROG Xbox Ally X handhelds that the company announced last week at the Summer Game Fest.

Microsoft and Sony are clearly working on their next generation consoles, and they probably don’t want to lag too far behind on the launch of the Nintendo Switch 2 that debuted on June 5. However, Xbox’s main competition has always been Sony, and we’ll see if both companies launch their systems in the same year again, as they did in 2020.

Microsoft said it will work with AMD to power next-generation gaming experiences across devices, including consoles, PC, handheld, and cloud.

The collaboration aims to uplevel the player experience by delivering advanced graphics with enhanced visual quality, more immersive gameplay using the power of AI, and compatibility with a player’s existing Xbox games library. Together, Xbox and AMD hope to enable play across devices in entirely new ways, delivering an Xbox experience designed for players – without being confined to a single store or tied to one device.

At the same time, Xbox is continuing to work more closely with the Windows team to ensure that Windows is the number one platform for gaming. 

Sony has also been using AMD for the previous two generations of its consoles. AMD has had an advantage over rivals Nvidia and Intel as it has a chip design that combines processor and graphics functions into the same package. And with developers focused on the AMD architecture, it’s hard for rivals to pry the console designs away from AMD.

Nintendo, however, has focused on Nvidia’s chips and it has used Nvidia for both the Switch and the Switch 2. I guess it’s time to get ready for a console war again. This will be the fifth generation of Xbox consoles that I will have covered.