Microsoft has confirmed a multi-year partnership with chipmaker AMD to co-engineer custom silicon for its next generation of Xbox hardware and cloud-based gaming platforms.

Xbox president Sarah Bond revealed the partnership in a video this week, detailing plans to develop a new range of hardware – including consoles, handhelds, cloud gaming, and accessories – all powered by AMD’s chip technology and AI innovations.

“This is about delivering a gaming experience not locked to a single store or device,” said Bond. “Together with AMD, we’re pushing the boundaries of gaming silicon to unlock new levels of performance, visual fidelity, and immersive gameplay – all while maintaining compatibility with your existing Xbox library.”

The collaboration extends beyond traditional consoles, hinting at a broader hardware ecosystem designed around Windows.

Bond said Microsoft’s vision is an Xbox platform that’s accessible across a wide range of devices, in the living room or on the go.

The announcement follows news of Microsoft’s Xbox Ally handhelds, launching later this year with a full-screen Xbox experience on top of Windows. These devices will support multiple storefronts like Steam – a direction that appears to reflect Microsoft’s strategy for the upcoming console generation.

Notably, the new Xbox consoles will retain backward compatibility, a critical feature that sets them apart from upcoming handhelds that rely on PC counterparts for game support.