TrendForce’s latest analysis shows that sharp increases in memory prices are putting heavy pressure on the bill of materials in consumer electronics.
This cost surge is pushing brands to raise retail prices and is weakening market demand across multiple device categories. After lowering its 2026 shipment outlook for smartphones and laptops, TrendForce has now cut its forecast for game console shipments as well, expecting a year on year decline of 4.4 percent.
The spike in memory prices is creating a direct impact on game console production. Console makers traditionally earned most of their profits from game titles and subscription services, allowing hardware to be priced attractively to build large user bases. This model relied on small price drops and frequent promotional offers. That approach is now under strain as memory components quickly become one of the most expensive parts of a console.
Nintendo’s Switch 2 illustrates this trend clearly. Its launch price of 450 dollars is higher than its predecessor mainly because memory capacity has doubled and component prices have risen. TrendForce expects memory modules alone to account for between twenty one and twenty three percent of total hardware costs in 2026. This reduces profit margins and limits Nintendo’s ability to apply price cuts later in the device lifecycle.
Sony and Microsoft face even greater pressure. TrendForce estimates that memory will represent more than thirty five percent of total hardware costs for their consoles by 2026. This makes it far more difficult for them to follow the industry’s usual mid cycle price reduction strategy. Some markets may even see retail prices increase to offset rising expenses. Microsoft is reportedly considering another price hike for the Xbox, despite implementing adjustments as recently as September.
Because manufacturers cannot reduce retail prices in the way they historically have, promotional activities throughout 2026 are expected to weaken. Both the PS5 and the Xbox Series lineup are now in a mature phase, and without price incentives, consumer demand could slow. Even though the Switch 2 is benefiting from early launch momentum, Nintendo has indicated that achieving economies of scale is critical to managing production costs, and ongoing shifts in component pricing remain a risk.
TrendForce also reminds the industry that supply chain challenges have affected console shipments before. In 2021, Sony cut PS5 production because of semiconductor shortages. Nintendo also reduced its Switch sales forecast multiple times in 2022 due to component shortages and weaker than expected holiday demand.
If memory supply and demand do not stabilize in the coming year, console manufacturers will continue to face higher production costs, reduced pricing flexibility, and slower shipment growth. TrendForce now expects global game console shipments to fall by 4.4 percent in 2026, reflecting the growing strain placed on the industry.
For consumers, the outcome is clear. Hardware prices are likely to stay high, discounts will be less frequent, and upgrading to new consoles may become more expensive. Families planning new game console purchases in 2026 may need to adjust their budgets as the industry shifts toward more defensive pricing strategies.
Baburajan Kizhakedath
