So lets map this out. Sony is 450. MS $460. They have $70-80 more to play with.
Last gen on 28nm, it cost Sony $100 for a 350mm2 die. MS paid $110 for 380mm2. 405mm2 would mean $120.
Are we expecting the costs to remain stagnant? AMD said 7nm is almost twice as expensive as 28nm. That would put the die cost at $200-240 and blow past the $70-80 extra budget they have given themselves.
Let's assume, the costs to fabricate the silicon are the same. We still have SSDs which are at least twice as expensive as HDDs were last gen. So thats an extra $37.
That leaves them $33 for a bigger chip, any extra RAM costs (goodbye HBM), audio chip, new controller features, cooling etc. Though they did say that cooling apparently only costs a few dollars now. I paid $90 for a liquid heatsink recently. i doubt that thing only cost a few dollars to make.
If the fab costs are the same as last gen, I can see both Sony and MS going with 400mm2 APUs with that $450 budget. But i highly doubt that. Remember Pachter said $1000 ps5. turns out it was less than half that. but ruthenticcookie said that they were going to take a $100 loss and sell at $499, that points to a BOM over $500 but less than $550. we know that thats no longer the case either.