How AI boom is pressuring video game consoles in race for memory chips

SAN FRANCISCO – Video game 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 (AI) infrastructure.

That has pushed memory makers to favour higher-margin data-centre 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 in 2025, they warned.

Sony, Xbox and Nintendo did not respond to requests for comment.

CyberPowerPC, a maker of high-end gaming PCs, announced price increases in late November.

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 games professor Joost van Dreunen, at New York University’s Stern School of Business.

He said sticker prices for consoles could rise another 10 per cent to 15 per cent over the next year or two, while PC prices could climb as much as 30 per cent 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 per cent in the last three months of 2025 and possibly 20 per cent more in early 2026, on top of the 50 per cent hikes so far in 2025.

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 per cent in 2025, down from a previous view of 9.7 per cent, and sees a 4.4 per cent decline in 2026, compared with an earlier forecast of a 3.5 per cent drop.

Spending on gaming hardware fell 27 per cent in November, while unit sales for the period were the weakest since 1995, with 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 in 2025 as tariffs on imports hike manufacturing costs, while a lack of system-selling games leaves ageing hardware without a major catalyst for growth.

High-end consoles such as the Xbox Series X retail for around US$650 (S$840), while the PlayStation 5 Pro is priced around US$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 is expected to go on sale in 2026.

Valve did not respond to a request for comment.

Companies will move cautiously if video game spending pulls back more broadly, Emarketer analyst Jacob Bourne said. “So instead of risking poor sales, we might see console makers delay releases.” REUTERS