Not only would it be more expensive for the chip itself, but since Intel's integrated graphics are notoriously crap, Microsoft and Sony would have to resort to a second chip. Just like before. That not only drives up costs but also power draw, heat, and size. By choosing AMD, the companies have sacrificed processing power (a good idea since gaming consoles don't need much to begin with) for an efficient and powerful graphics processor. Going with a custom made AMD APU was the best choice for both companies and it's a shame Nintendo did not choose to go the same route.
AMD didn't buy ATI for nothing. Intel may make better pure CPUs, but their APUs and graphics chips are trash.







