Microsoft allegedly canceled plans to go ahead with the development of an Xbox handheld because chipmaker AMD required minimum sales of 10 million units in its contract.
Known hardware insider KeplerL2 took to the NeoGAF forums to share that Microsoft has canceled its in-development Xbox handheld due to contractual complications with AMD. They claimed that AMD required a minimum commitment of over 10 million units to justify the development of a custom SoC (System-on-Chip) for the device , a threshold Microsoft was likely unwilling to meet given current market trends.
The insider explained that Microsoft’s decision was influenced by the modest sales performance of competing handheld PCs. They pointed out that Valve’s Steam Deck has sold around five million units, while devices like the ASUS ROG Ally and Lenovo Legion Go have reached sales of only 1 to 2 million units each. With such limited market traction in the handheld space, Microsoft allegedly viewed the risk of committing to AMD’s 10-million-unit minimum as unjustifiable.
KeplerL2 also clarified that the Xbox handheld wasn’t meant to be a Windows-based portable PC like the Steam Deck, but rather a dedicated portable console, more in line with Sony’s approach to the rumored PlayStation handheld. However, the project was canceled early in development, long before reaching a public reveal stage. Furthermore, when asked about AMD’s future chip roadmap, Kepler stated that Valve is expected to continue using a “cutdown Medusa Premium SKU” for the next Steam Deck handheld.
On the topic of next-gen Xbox hardware, codenamed “Magnus”, the insider mentioned that Microsoft’s deal with AMD involves a minimum order quantity for chips, which could make canceling the console more expensive than releasing it. The insider explained that even if Microsoft pivots toward “Xbox PCs” made by partners like ASUS or MSI, those OEM shipments alone likely wouldn’t meet AMD’s contractual minimums. They also claimed that the Magnus chip was scheduled to tape-out in Q4, with AMD requiring upfront commitments to fund R&D costs.
