Rising memory prices force console makers to rethink pricing

According to TrendForce’s latest report, the surge in memory costs has raised the bill of materials (BOM) for consumer electronics, forcing manufacturers to raise retail prices and dampening market demand. After previously reducing its 2026 forecasts for smartphones and laptops, TrendForce has now lowered its projection for game console shipments from a year-on-year decline of 3.5% to 4.4%.

The report notes that memory price hikes are affecting major consoles, including Nintendo’s Switch 2. Traditionally, console makers relied on software sales and subscriptions for most of their profits, using retail price reductions and promotions to expand their user base. That model is under pressure.

The Switch 2 launched at USD 450—higher than its predecessor—due to increased memory capacity and rising component costs. TrendForce projects that memory modules will account for 21–23% of total hardware costs for Nintendo in 2026, sharply reducing margin flexibility and limiting the potential for discounts.

Sony and Microsoft face even higher memory-related costs, expected to exceed 35% of total BOMs. Rising component expenses complicate the traditional mid-cycle price cuts that have historically stimulated sales years after a console’s launch. Reports indicate Microsoft is considering another Xbox price increase despite adjustments made in September.

“The inability to lower retail prices—or the need to keep them elevated—will likely weaken promotional efforts in 2026,” TrendForce wrote in a press release. 

With the PS5 and Xbox Series entering maturity and the Switch 2 relying on early-cycle momentum, the report warns that limited price incentives could reduce consumer demand.

Historically, supply constraints have disrupted console shipments. Sony reduced PS5 production from 16 million to 15 million units in 2021 due to semiconductor shortages. Nintendo similarly lowered its Switch forecast multiple times between 2022 and 2023, finishing the fiscal year at just under 18 million units.

Given the current memory market dynamics, TrendForce expects global console shipments to decline 4.4% year-on-year in 2026. The report concludes that unless memory supply and pricing stabilise, growth in console adoption could stagnate.