Rising memory costs are squeezing console margins and sales

Rising memory prices are hitting the game console market where it hurts. Manufacturers are finding it tougher to make money on hardware, and the long-standing tactic of cutting prices to grow the audience is starting to falter. According to TrendForce, more expensive DRAM and NAND have pushed up the cost of components across consumer electronics, forcing brands to lift retail prices and damping demand. Against that backdrop, analysts lowered their 2026 console shipment outlook: they now expect a year-over-year decline of 4.4% versus the previously forecast 3.5%.

TrendForce points out that consoles have always played by different rules than smartphones: the bulk of profits historically came from games and subscriptions, not from the devices themselves. That model let platform holders gradually trim console prices and run promotions to widen the user base. Surging memory costs are rewriting that math. A telling example is the cited Switch 2 launch price of $450—higher than its predecessor—which is linked to doubled memory capacity and broader component inflation. By 2026, TrendForce estimates memory modules could account for roughly 21–23% of a console’s bill of materials, squeezing per-unit margins and leaving Nintendo far less room for future markdowns.

The pressure is even stronger for Sony and Microsoft. By 2026, memory is projected to represent more than 35% of their total component costs. That makes the classic mid-cycle price cut far harder to execute and, in some regions, could even nudge companies toward price increases to offset rising expenses. There’s already chatter that Microsoft may consider another Xbox price adjustment, despite recent changes—hardly the kind of discussion platform holders welcome in a competitive market.

TrendForce warns that limited ability to discount will dull promotional campaigns in 2026. For mature platforms like PS5 and Xbox Series, that raises the risk of waning buyer interest: without price incentives, the market tends to cool quickly. Even the Switch 2, buoyed by its launch momentum, remains dependent on manufacturing scale—and any fresh swings in component costs could hit profitability. In practical terms, the industry’s usual levers are losing their pull just as they’re needed most.

Analysts also note that consoles have repeatedly been at the mercy of supply chains. In 2021, Sony pared back PS5 production plans because of semiconductor shortages, and in 2022 Nintendo revised its Switch sales outlook multiple times amid constraints and softer demand. Today, memory is increasingly emerging as the biggest bottleneck; if the balance of supply and demand does not improve over the next year, global console adoption risks slowing—or even stalling.