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Tuesday, April 9, 2013 - Page updated at 05:00 p.m.

Microsoft said to use AMD chips in next Xbox

By Cliff Edwards, Dina Bass and Ian King
Bloomberg News

Microsoft will use an Advanced Micro Devices processor in its next Xbox game console as it seeks to cut the cost of building the devices and get developers to create more titles, people with knowledge of the matter said. AMD stock Monday surged the most in almost two years.

The Xbox will use an AMD system-on-a-chip that combines powerful “Jaguar” central processing units with graphics chips, said one of the people, who sought anonymity because the plans aren’t public.

The shift to the so-called x86 format ubiquitous in modern personal computers means Microsoft will drop the Power PC technology designed by IBM, and game discs made for the current Xbox 360 won’t be compatible.

The switch is a boon for AMD, which is also providing chips for Sony’s coming PlayStation 4, as it seeks a larger slice of the $67 billion global video-game market to help lessen its reliance on the shrinking PC industry.

Microsoft also stands to benefit because game developers, who have moved toward making games for PCs and mobile devices, will find it easier to deliver those titles for the next Xbox.

“We’ll probably see many more titles because the console makers are saying the publishers are back in the driver’s seat,” said Richard Doherty, president of technology consulting firm Envisioneering Group. Developers won’t have to reinvent various features, such as “smoke, shading and reflections for each machine and can essentially create once and port once, and be done.”

Game publishers have complained that current consoles, each with a different architecture, come with a steep learning curve that drives up development costs, according to Doherty. Those companies will save money with the new chips, he said.

The stock of Sunnyvale, Calif.-based AMD rose 13 percent to $2.59 Monday, the most since July 2011. That put the shares up 7.9 percent this year, reversing what had been a year-to-date decline.

Microsoft stock slipped 0.4 percent to $28.59. It has climbed 7 percent so far this year.

Microsoft hasn’t released the next Xbox’s specifications, including whether it will have an optical drive or details of online-game features and entertainment services.

John Taylor, an AMD spokesman, declined to comment, as did Microsoft spokesman David Dennis.