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Below, because to do otherwise would require either of two things: 1) a higher price than the PS4, which we know Nintendo won't do, or 2) a much higher power consumption footprint than the PS4, which we know they won't do.

Third parties are sitting pretty happy at the moment with PS4/XB1 and PC using similar architectures, Wii U is the outer, not just in power but in the uniqueness of its architecture. If Nintendo want third parties on board, they need to develop a platform around a similar architecture, and provide similar dev tools, otherwise third parties will just ignore it again, especially because unlike the Wii where it really had 50% marketshare (forcing third parties to put something on it), the NX will be competing with a firmly entrenched PS4/XB1 and PC marketshare.

Assuming they go with a similar architecture, they more or less have to go with AMD as Intel 1) isn't interested in super low margin consoles (which they've said before) and 2) don't have the necessary GPU tech with which to integrate into an APU (sufficient to match PS4/XB1). To not have an integrated APU would increase cost and further reduce their ability to compete.

Going with AMD, at best they can go with Puma cores and an updated Radeon, however to be cost competitive with PS4/XB1 it can't be any larger than the existing PS4/XB1 APU's, which currently is ~330mm2. As the NX APU would be manufactured on the same process as the PS4/XB1 (because they'll be made by the same people, TSMC), to keep within the same size means keeping the same transistor budget. Contrary to what someone in this thread said, Puma is not expected to any faster clock for clock than Jaguar (they have the same architecture), and it has the same transistor budget. What it improves is energy efficiency, which may allow Nintendo to clock the NX APU higher but we aren't talking 40%, maybe 20% higher max. Improvements in Radeon performance have scaled pretty linearly with transistor count, so it is unlikely that AMD will be able to improve NX's GPU without increasing transistor budget (and cost).

So in a nutshell, with PS4/XB1 being based on very low margin high volume hardware, there isn't much room for design efficiency improvements whilst maintaining a similar system architecture in order to get third party support. Therefore, if Nintendo want to be cheaper than the PS4, then the NX will need to be less powerful.