At the heart of the issue is a growing imbalance in the memory chip market. Demand for dynamic random access memory (DRAM)—a core component in gaming consoles such as Sony’s PlayStation, Microsoft’s Xbox, and Nintendo’s upcoming Switch 2—has outstripped supply as technology companies pour billions into artificial intelligence infrastructure. Memory manufacturers are increasingly prioritising higher-margin chips for data centres, tightening availability for consumer electronics.
Micron Technology has already signalled the shift, announcing plans to discontinue its long-running Crucial brand, which has been popular among PC builders and gaming enthusiasts. Industry analysts say the move reflects a broader reallocation of resources toward enterprise and AI-driven demand.
Memory chips are critical to gaming systems, enabling fast load times, smooth frame rates and reliable performance—features that are especially important for modern, high-budget titles. As costs rise, console makers may have little choice but to pass some of the burden onto consumers.
Manufacturers Face Tough Pricing Decisions
Because gaming consoles are typically sold on slim margins, rising component costs could force manufacturers to raise prices, analysts warn. However, further price increases risk dampening demand, particularly after tariff-related hikes earlier this year.
Sony, Microsoft and Nintendo declined to comment, but signs of pressure are already emerging across the broader gaming hardware market. CyberPowerPC, which produces high-end gaming PCs, announced price increases last month, while reports indicate that Dell Technologies and Lenovo are also planning higher prices.
“Memory accounts for about a fifth of a PC’s total component cost, so this hits manufacturers hard,” said Joost van Dreunen, a games industry professor at NYU’s Stern School of Business. He estimates that console prices could rise by another 10% to 15% over the next one to two years, while PC prices could climb as much as 30% if memory costs continue to surge into 2026.
Market Outlook Weakens
Research firms are already adjusting their forecasts. Counterpoint Research estimates that memory prices rose about 50% earlier this year and could increase another 30% in the final quarter of 2025, with a possible additional 20% rise early next year.
Although major console makers often secure component supplies years in advance and extend product life cycles to soften cost shocks, analysts say the strategy may not be enough. TrendForce has cut its console market growth outlook for this year to 5.8%, down from an earlier estimate of 9.7%, and now expects a 4.4% decline in 2026.
Industry tracker Circana reported that spending on gaming hardware fell 27% last month, with unit sales hitting their weakest level since 1995. Average selling prices reached a record for the period, reflecting both higher manufacturing costs and a lack of blockbuster titles capable of driving upgrades to ageing hardware.
High-end consoles such as Microsoft’s Xbox Series X now retail for around $650, while Sony’s PlayStation 5 Pro is priced near $750, according to company announcements.
Delays Could Replace Price Increases
Higher component costs could also complicate the launch of new devices, including Valve’s Steam Machine, a PC-based gaming platform expected next year. Valve declined to comment.
Rather than risk poor sales in a softening market, companies may opt to delay releases instead of raising prices further, said Jacob Bourne, an analyst at Emarketer.
“If videogame spending pulls back more broadly, manufacturers will move cautiously,” Bourne said. “Instead of risking weak demand, we could see console makers push back launch timelines.”
For an industry already grappling with inflation, tariffs and slowing consumer demand, rising memory chip prices now threaten to extend the downturn into 2026.