A new rumor via reddit user Flight714 suggests Sony never intended to release an upgraded PS4 (PSNeo) but that their original plan was to simply shrink the chips and possibly make a PS-slim. 

Unfortunately for Sony, AMD while moving to a die-shrink was also introducing the Zen core CPU. AMD wanted to streamline their production to focus on the new chips leaving Sony in a predicament... arrange a custom line, costing millions more to produce the old chip (also a time factor) or switch over to the new chips which would cost less and offer a performance boost.

Further information at the link;

http://www.designntrend.com/articles/76482/20160520/playstation-neo-rumor-console-production-price-sony-new-ps4.htm

https://www.reddit.com/r/PS4/comments/4jc9kf/ps4_neo_an_amd_investor_presentation_suggests/

Do you think this will be more understandable for consumers? 

Should Sony have invested in a custom line?

Ps4 vannila will stil be sold soo...figure it out.

I don't know how these sorts of contracts work, but it seems odd that they could stop making the chips for Sony without a lawsuit or something.

This rumor is bunk. Sony expressed interest in an interview before or around the launch for PS4 that they were considering hardware upgrades over the course of this gen. I believe the exact term they referred to was a Ps4.2
That was years ago.

Beyond that. You can also bet that AMD is contractually obliged into whatever they agreed upon with Sony. There is absolutely no way that AMD would be able to strong arm their way out of releasing a smaller and more efficient APU unless there were either some sort of out of court settlement, clause, or lawsuit.

AMD doesn't manufacture their chips any longer. They spun off their chip foundry years ago. This rumor makes zero sense.

garbage rumor. Firstly AMD doesn't manufacture, they design so they have nothing to streamline as they don't do the production. Secondly these sort of things are worked out in contracts long long before they hit design let alone production.

Seems plausible

2014
http://wccftech.com/amd-developing-20nm-ps4-xboxone-apu/
2015
http://www.anandtech.com/show/9418/amd-confirms-20nm-products-moved-to-finfet-warns-on-q215-earnings

20nm die shrink was intended yet failed somehow. Moving to finfet means a change in architecture, thus no 1:1 match with the current ps4 design. Which leaves Sony 2 choices, stick with the 28nm design and have no hope of increasing the profit margin, or design a faster ps4 that can comfortably run current ps4 games in compatibility mode while allowing upgrades as well and sugarcoat the missing slim and price hike by promising improved performance.

They could have still locked the extra power if they wanted, dont believe this rumor

I doubt it. PSNeo pretty much guaranteed that they'll be selling PS4s for the next 6 years without issue. They pretty much sealed their position for a long time and will end up selling Neos at a massive profit.

Find this rumor hard to believe personally.