6 years ago, Intel was on the 8700K era. Put that on the PS5, and it would only have 5C10T left for games.
And when it comes to games, the difference between an
3700X and an 8700K is around 4%.
The 3700X the PS5 has is a cutdown version, because it has to make room for the GPU units. But the thing we have to consider is that consoles are meant to run games at 30 to 60 fps.
Consoles don't need ultra high end CPUs that can spit out hundreds of FPS.
And of course the pro consoles will have the same CPU, to maintain direct compatibility, within the same generation. Only with the PS6, should we expect it to use new CPUs.
In the matter of the GPU, AMD is on par with Nvidia when it comes to rasterization. It's with regards to RT that it's lagging.
Sony and MS don't go with AMD just because it is cheaper. It's also because AMD has an X86 license, making it much easier to port games to and from the PC. And because there are so many tools, middleware and engines with support for it.
The other big reason is that AMD is much easier to work with. Nvidia is notable for being a very bad company to collaborate with to make consoles.