AI Boom Drives Up Memory Chip Prices, Pressuring Video Game Console Industry

The video game console market is facing a fresh challenge: skyrocketing memory chip prices driven by the growing demand for artificial intelligence infrastructure. This surge comes on top of existing pressures from tariffs and weaker consumer spending, potentially making consoles like the Nintendo Switch 2, Sony PlayStation, and Microsoft Xbox more expensive for gamers worldwide.

Memory Chip Shortages Hit Consoles

Dynamic random access memory (DRAM) is essential for modern gaming consoles, ensuring smooth frame rates, fast load times, and optimal performance in high-budget titles. However, with the AI industry rapidly expanding, memory manufacturers are prioritizing higher-margin chips for data centers.

For example, Micron Technology recently announced it will phase out its long-standing Crucial brand, a favorite among PC builders and gaming enthusiasts. This shift reduces the supply of memory chips available for consumer gaming hardware.

Console Makers May Raise Prices

The rising cost of memory chips could force console makers to increase retail prices. Analysts warn that these devices often operate on very thin profit margins, so even small increases in component costs can have a significant impact.

Gaming PCs from companies like CyberPowerPC have already seen price hikes.

Other manufacturers, including Dell Technologies and Lenovo, are also reportedly planning increases.

> “Memory accounts for roughly 20% of a PC’s total component cost. Rising prices hit manufacturers hard,” said Joost van Dreunen, a games professor at NYU Stern School of Business.

> He predicts console prices could rise by 10–15% over the next one to two years, while PC prices might jump as much as 30% if memory costs continue to climb in 2026.

Projected Price Hikes and Market Impact

Industry research suggests memory prices could surge again soon:

Counterpoint Research estimates a 30% increase in the last quarter of 2025 and another 20% in early 2026.

This follows 50% price hikes earlier this year.

Even though major console makers often lock in inventory years ahead or extend product life cycles, analysts are downgrading growth forecasts:

•  TrendForce now predicts 5.8% growth in console sales for 2025, down from 9.7%.
•  For 2026, a 4.4% decline is expected, slightly worse than previous estimates.

Current Market Conditions

Several factors have contributed to the current slowdown:

 Spending on gaming hardware fell  27% last month.

 Unit sales were at their lowest since 1995.

 The average price of new gaming devices reached a record high.

High-end consoles now retail at:

Xbox Series X:~$650

PlayStation 5 Pro:~$750

Tariffs on imports and a shortage of blockbuster games for older consoles have further compounded the situation. Upcoming devices like Valve’s Steam Machine  could also face delays or higher prices due to increasing component costs.

Industry Outlook

Emarketer analyst Jacob Bourne  warns that console makers may delay releases if broader consumer spending declines.

“Instead of risking poor sales, companies might slow down launches until conditions improve"

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FAQs

Q1: Why are video game console prices rising in 2025?

A: Prices are increasing due to a surge in memory chip costs. The AI boom has raised demand for DRAM used in data centers, leaving fewer chips available for consumer consoles like Nintendo Switch 2, PlayStation 5 Pro, and Xbox Series X.

Q2: Which consoles are most affected by memory chip shortages?

A: The shortage impacts all major consoles, including Nintendo Switch 2, Sony PlayStation 5 Pro, and Microsoft Xbox Series X. High-end PCs are also affected.

Q3: How much could console prices increase?

A: Analysts estimate that console prices could rise 10–15% over the next 1–2 years, while PC prices may increase up to 30% if memory costs continue to climb.

Q4: Can memory chip shortages cause delays in console releases?

A: Yes. Rising component costs may prompt companies to delay new console launches or extend device life cycles to avoid poor sales.

Q5: What can gamers do to prepare for rising console prices?

A: Gamers can consider purchasing consoles early , look for deals, or consider upgrading existing hardware while supply is stable. Staying updated on announcements from Sony, Microsoft, and Nintendo is also recommended.

Q6: Will the AI boom continue to affect gaming hardware prices?

A: Yes, the demand for AI infrastructure is expected to continue driving up memory chip prices in 2026 and beyond, impacting both gaming consoles and PCs.

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The combination of rising memory costs, weak consumer demand, and existing tariffs suggests that 2025–2026 could be a challenging period for the console market