Microsoft announced Wednesday that it will provide video game developers with prototypes of its next-generation Xbox console, set for 2027, in an effort to catch up with Nintendo and Sony.

The new console will include a custom chip from Advanced Micro Devices, according to vice president in Microsoft’s Xbox division, Jason Ronald in a blog post.

“It delivers an order of magnitude leap in ray tracing performance and capability, integrates intelligence directly into the graphics and compute pipeline, and drives meaningful gains in efficiency, scale, and visual ambition,” Ronald wrote. “The result is more realistic, immersive, and dynamic worlds for players.”

Microsoft made the announcement weeks after revealing that longtime gaming leader Phil Spencer is retiring, with AI executive Asha Sharma set to take over. Sharma told employees the company will reaffirm its commitment to Xbox, starting with console gaming.

“I’m excited to share we plan to ship alpha versions of the hardware to developers beginning in 2027,” Ronald wrote.

Microsoft is reportedly aiming for its gaming division to achieve a 30 per cent profit margin. Last year, the company cut jobs and canceled several in-development titles.

Last week, Sharma mentioned the next-generation console, internally called Project Helix, in a post on X.