It's complicated. The margins on console chips are lower than PC margins. When AMD had spare capacity (GloFo), that was great. But with everyone at TSMC and AMD demand high, those wafers could be used for more profitable chips. But the console deals definitely helped AMD in the dire times.

IMO, the strategic error was AMD paying a bunch of cash for ATI, instead of an all stock deal. In 2006, with their stock near the all time high (~$40) AMD decided to borrow $2B instead. Six months later, AMD is issuing shares at $14 to meet expenses. Two years later, AMD is trading at $1.50, and on the verge of bankruptcy. In retrospect, AMD's outcome could have been vastly different if they had done the all-stock deal in 2006, or even issued shares instead of borrowing.