PlayStation 2, 3 and 4 used AMD technology, and it was always crystal clear that PlayStation 5 will use AMD CPU and GPU combo. The logical choice was Zen 2 and Navi since the console is supposed to hit the market in 2020. By that time, the 7nm process should be fine, and AMD will have both products ready.
AMD is designing a semi-custom design for Sony; this is where Lisa has real expertise and what we learned over the years that she likes to do. She likes the semi-custom business as this is stable but yet a lower margin business than selling GPUs or CPUs to OEMs. Selling to OEMs is volatile, as it fluctuates based on market conditions while semi-custom guys have to commit years in advance.
Nvidia is doing well in gaming GPUs and makes most of its money there, and sees PlayStation and Xbox as competitors.
Anyone who was surprised by AMD being in PlayStation 5 doesn’t know the market well enough.