Why is AMD happy selling APUs for PS5s rather than making dedicated GPUs?

In the middle of a chip shortage, we are seeing giants like NVIDIA, Intel and AMD facing issues to cope up with the excessive demand. However, we see a lot of PS5s and Xboxes sold, at least better situation than the GPUs, so as we know, AMD makes those APUs for these consoles.

However, AMD’s situation with GPUs is even worse than NVIDIA; why? It is because that they are happy making more SoCs for consoles which are giving them more profit than making a dedicated GPU for gamers.

That gives them almost 20% more profit for AMD if they sell APUs to Sony or Microsoft even for say $200, watch Dr Ian Cutress’s video for a good idea about wafers and how the math is done:

In the video, you see where he takes the reference of a Zen 2 Renoir APU, the Ryzen 7 4750G that retails for $323 and if from one wafer suppose no defect in yields, AMD makes 400 of them considering the die size. So, you have the math, AMD could make $129,200 of money and the cost of the wafer from TSMC could be around $6000, so this is a gain of 21 times.

Whereas from the same 7nm wafer AMD can make 100 of Navi 21 GPUs, considering a 100% yield, so, ultimately if sold at $999, that generates a revenue of an estimate $99,900 and that 16 times the profit from one TSMC wafer. Well, then you have extra costs associated with GDDR6 memory, packaging, testing and more, so you get an idea, that making GPUs for AMD generates lesser revenue than by selling APUs or CPUs.

Now, these are not the best numbers or mostly based on rumours the cost that TSMC takes as no one knows, but you get an idea so as to why AMD prefers taking bulk orders from Sony or Microsoft for consoles rather than working to improve their GPU stocks.

Also, we do not have the exact idea at what AMD sells those APUs or how many of them they make from one wafer, but, those SoCs do not even need packaging, or rigorous testing, as the console makers are there to do so. This is why Sony ordered a bulk of 22 million AMD chips and the Red team was happy to prioritize console chip production over its CPUs and especially RDNA 2 based graphics cards.