AI Memory Prices Squeeze Console Manufacturers
Demand for high-bandwidth memory chips used in gaming consoles has surged due to artificial intelligence infrastructure buildouts. Suppliers prioritize AI data center orders, driving dynamic random access memory prices up over 50 percent in 2025. Console makers including Sony, Microsoft, and Nintendo face component shortages and elevated costs for PlayStation 5, Xbox Series, and Switch 2 systems. Analysts project further 20 to 30 percent increases into early 2026.
The Wireless Power Consortium notes tight supply chains for advanced DRAM variants required in current-generation hardware. Nintendo Switch 2 incorporates enhanced memory modules supporting higher performance modes. PlayStation 5 Pro utilizes similar specifications for improved ray tracing and upscaling features. Xbox Series X relies on comparable GDDR6 allocations for 4K gaming capabilities.
Manufacturers implemented multiple price adjustments throughout 2025 to offset rising bills of materials. Xbox Series consoles received two increases, pushing flagship models to $649.99 in the United States. Nintendo raised Switch 2 pricing to $499.99 at launch compared to the original Switch’s $299.99 entry point. Sony adjusted regional PlayStation 5 bundles amid component pressures.
U.S. November console sales reached only 1.6 million units across all platforms, marking the lowest holiday period since 1995 according to Circana data. Xbox Series volumes declined over 70 percent year-over-year. PlayStation 5 shipments fell more than 40 percent. Combined Switch and Switch 2 sales dropped over 10 percent despite the new model’s availability.
Counterpoint Research forecasts sustained memory price elevation through the first quarter of 2026. Console vendors weigh additional hikes against demand sensitivity in a maturing market cycle. Third-party alternatives remain limited as dominant suppliers allocate production to higher-margin AI clients.
This supply dynamic compounds existing challenges from tariff impacts and reduced consumer spending on discretionary electronics. Hardware sales growth slowed industry-wide, with global console revenue projected at $45 billion for 2025 representing modest 4.2 percent year-over-year gains per Newzoo estimates. Manufacturers explore long-term contracts and alternative sourcing to mitigate ongoing volatility.
