Microsoft abandoned in-house Xbox handheld because of AMD costs, says rumor

A new rumor suggests that Microsoft canceled development of its own in-house Xbox handheld, and it's all down to AMD. While we're just weeks away from the new Asus-built ROG Xbox Ally launching, it's now been claimed that Microsoft previously considered building its own handheld in-house. Those plans, the rumor suggests, were canceled because AMD wanted a significantly high order of 10 million CPUs before it would proceed.

Most of the entries in our best handheld guide are powered by an AMD processor right now, including the Steam Deck, which also has a custom CPU. AMD has dominated the handheld gaming PC market with its dedicated APUs, and if this rumor is true, it means that Microsoft couldn't meet the chip maker's demands for a custom CPU.

This information, while very much unconfirmed, was revealed by regular hardware tech leaker KeplerL2 in a post on the Neogaf forums, which discussed Microsoft's current hardware strategy. Following a question about Microsoft's own handheld plans, KeplerL2 suggests that, as far as they know, Microsoft backed out of building a handheld in-house because "AMD wanted a commitment of 10m+ units to justify making a dedicated SoC."

KeplerL2 goes on to say that, given that the Steam Deck only sold "~5 million units" while other handhelds, such as those from Asus and Lenovo, only sold "1-2 million," Microsoft "didn't want to take the risk" of proceeding with such a high order.

AMD has developed custom APUs for handhelds before, so this wouldn't have been unusual, especially for a company such as Microsoft, which uses custom AMD chips to power its Xbox consoles. The Steam Deck, for instance, uses a custom AMD APU, featuring four Zen 2 CPU cores and an RDNA 2 GPU, with the codename Van Gogh. That design has since reportedly been used as the basis for the new AMD Ryzen Z2 A, but was specifically designed for the Steam Deck.

Microsoft never confirmed that it was building its own Xbox handheld in-house. However, as we know now, the company did proceed with an Xbox-branded handheld, partnering with Asus to build it externally instead. The Asus ROG Xbox Ally and ROG Xbox Ally X are both set to launch on October 16, with the base-model ROG Xbox Ally using the aforementioned AMD Ryzen Z2 A. The ROG Xbox Ally X, meanwhile, uses the more powerful AMD Ryzen Z2 Extreme.

Prep a giant grain of salt, however. According to Windows Central's Jez Corden in this post on X (formerly Twitter), this information "isn't even slightly true." KeplerL2 does have a strong reputation for rumors and leaks, but Corden's links within the industry are pretty solid, too.

Either way, it's interesting to see that Microsoft may have investigated the possibility of building a handheld itself, and while that didn't come into fruition, it hasn't stopped the company's plans for handheld gaming. Our recent ROG Xbox Ally preview at Gamescom, along with the ROG Xbox Ally's specs, give us high hopes that the two new Xbox portables are going to be seriously powerful entries into the market, especially given Asus' past releases. We'll be keen to put that theory to the test once they both launch.

Until then, check out our Asus ROG Ally X review to see our thoughts on the last Asus handheld to launch. If you're looking for a bigger (but still portable) rig for gaming, our best gaming laptop guide has options to suit any budget.

Excited to give the new ROG Xbox Ally a try when it launches? Let us know your thoughts on the new Xbox handhelds by starting a conversation in our community Discord server today.