AI Boom Squeezes Videogame Console Industry as Memory Chip Demand Soars

How AI boom is pressuring videogame console industry in race for memory chips

As the demand for artificial intelligence technology escalates, gaming enthusiasts may soon face a price bump on their favorite consoles. Rising costs of memory chips could lead giants like Sony, Microsoft, and Nintendo to hike prices by anywhere from 10% to 15% over the next couple of years. Furthermore, PC gaming setups might experience a similar surge. Videogame console sales were already under pressure owing to tariff turmoil and weak consumer spending. Now a surge in the prices of memory chips is threatening to make the devices costlier in what could be another blow to the industry. Demand for dynamic random ⁠access memory - chips used in Sony's PlayStation, Microsoft's Xbox and the Nintendo Switch 2 - has exceeded supply as the tech sector races to build out artificial intelligence infrastructure. That has pushed memory makers to favor higher-margin data-center chips, tightening supply for consumer devices. Micron, for instance, is pulling the plug on its long-running Crucial brand, a staple for PC builders and hobbyists. Memory chips are central to gaming systems, enabling quick load times, smooth frame rates and overall performance - features that matter most in big-budget and proven titles. Console makers forced to raise pricesWith rising costs related to chips, console makers and other gaming-hardware producers may be forced to raise prices as the devices are usually sold on razor-thin margins, analysts and industry experts said. But such a move could sharply dent demand after tariff-driven hikes earlier this year, they warned. Sony, Xbox, and Nintendo did not respond to requests for comment. CyberPowerPC, a maker of high-end gaming PCs, announced price increases late last month. Others such as Dell Technologies and China's Lenovo also plan to raise prices, according to reports. "Since memory makes up about a fifth of a PC's total component costs, this hits manufacturers hard," said Joost van Dreunen, games professor at NYU's Stern School of Business. He said sticker prices for consoles could rise another 10% to 15% over the next year or two, while PC prices could climb as much as 30% as memory prices rise again in 2026. Another price jump, delays likely in 2026 Counterpoint Research estimated in November that memory prices were likely to rise 30% in the last three months of 2025 and possibly 20% more early next year, on top of the 50% hikes so far this year. Even though major console makers such as Sony typically lock in some inventory years ahead and can extend device life-cycles to blunt the impact, some industry watchers have downgraded their forecasts for the console market. TrendForce expects growth of just 5.8% this year, down from a previous view of 9.7%, and sees a 4.4% decline in 2026 compared with an earlier forecast of a 3.5% drop. Spending on gaming hardware fell 27% last month, while unit sales for the period were the weakest ⁠since 1995 as the average price ⁠of a new gaming device hit a record for the month, according to industry tracker Circana. Average selling prices for consoles have increased this year as tariffs on imports hike manufacturing costs, while a lack of system-selling games leaves aging hardware without a major catalyst for growth. High-end consoles such as the Xbox Series X retail for around $650, while the PlayStation 5 Pro is priced around $750, according to company announcements. Higher component costs could also complicate the roll-out of devices including the Steam Machine, a PC gaming platform from Counter-Strike creator Valve, which was expected to go on sale next year. Valve did not respond to a request for comment. Companies will move cautiously if videogame spending pulls back more broadly, Emarketer analyst Jacob Bourne said. "So instead of risking poor sales, we might see console makers delay releases."

How AI boom is pressuring videogame console industry in race for memory chips

Dec 22 (Reuters) - Videogame console sales were already under pressure owing to tariff turmoil and weak consumer spending. Now a surge in the prices of memory chips is threatening to make the devices costlier in what could be another blow to the industry. Demand for dynamic random access memory - chips used in Sony's PlayStation, Microsoft's Xbox and the Nintendo Switch 2 - has exceeded supply as the tech sector races to build out artificial intelligence infrastructure. That has pushed memory makers to favor higher-margin data-center chips, tightening supply for consumer devices. Micron, for instance, is pulling the plug on its long-running Crucial brand, a staple for PC builders and hobbyists. Memory chips are central to gaming systems, enabling quick load times, smooth frame rates and overall performance - features that matter most in big-budget and proven titles. CONSOLE MAKERS FORCED TO RAISE PRICES With rising costs related to chips, console makers and other gaming-hardware producers may be forced to raise prices as the devices are usually sold on razor-thin margins, analysts and industry experts said. But such a move could sharply dent demand after tariff-driven hikes earlier this year, they warned. Sony, Xbox, and Nintendo did not respond to requests for comment. CyberPowerPC, a maker of high-end gaming PCs, announced price increases late last month. Others such as Dell Technologies and China's Lenovo also plan to raise prices, according to reports. "Since memory makes up about a fifth of a PC's total component costs, this hits manufacturers hard," said Joost van Dreunen, games professor at NYU's Stern School of Business. He said sticker prices for consoles could rise another 10% to 15% over the next year or two, while PC prices could climb as much as 30% as memory prices rise again in 2026. ANOTHER PRICE JUMP, DELAYS LIKELY IN 2026 Counterpoint Research estimated in November that memory prices were likely to rise 30% in the last three months of 2025 and possibly 20% more early next year, on top of the 50% hikes so far this year. Even though major console makers such as Sony typically lock in some inventory years ahead and can extend device life-cycles to blunt the impact, some industry watchers have downgraded their forecasts for the console market. TrendForce expects growth of just 5.8% this year, down from a previous view of 9.7%, and sees a 4.4% decline in 2026 compared with an earlier forecast of a 3.5% drop. Spending on gaming hardware fell 27% last month, while unit sales for the period were the weakest since 1995 as the average price of a new gaming device hit a record for the month, according to industry tracker Circana. Average selling prices for consoles have increased this year as tariffs on imports hike manufacturing costs, while a lack of system-selling games leaves aging hardware without a major catalyst for growth. High-end consoles such as the Xbox Series X retail for around $650, while the PlayStation 5 Pro is priced around $750, according to company announcements. Higher component costs could also complicate the roll-out of devices including the Steam Machine, a PC gaming platform from Counter-Strike creator Valve, which was expected to go on sale next year. Valve did not respond to a request for comment. Companies will move cautiously if videogame spending pulls back more broadly, Emarketer analyst Jacob Bourne said. "So instead of risking poor sales, we might see console makers delay releases." (Reporting by Zaheer Kachwala in Bengaluru; Editing by Aditya Soni and Arun Koyyur)