Taiwanese chip manufacturer Macronix has announced its intention to gradually withdraw from the manufacturing of Read-Only Memory (ROM) chips used in video games, a decision that could cast a shadow over Nintendo's supply chains and the costs of its physical games.
This announcement came within the company's third-quarter earnings report, where it explained that ROM chip production has reached its end, as the company shifts toward more profitable technologies such as NAND, NOR, and eMMC memories, which are seeing massive demand driven by the growth of the AI industry that is putting pressure on memory and storage resources globally.
Reasons for the shift in production
ROM chip production saw a 39% decrease over the past year, currently accounting for only 5% of Macronix's total business. The company faces manufacturing capacity pressures, with its current capacity being 25,000 12-inch wafers per month. With plans to invest $1.2 billion to increase capacity, the company prefers to allocate this space to higher-margin chips instead of less profitable ROM chips.
Potential impacts on Nintendo
Analyst David Gibson points out that Macronix is a major supplier of the memory chips used in Nintendo Switch game cartridges. With its withdrawal, Nintendo may be forced to rely on other suppliers such as Rohm and Lapis Semiconductor, which could significantly increase manufacturing costs.
What does this mean for users?
This supply shortage may translate into higher prices for physical games (cartridges) when they are released on the market. Nintendo has already begun taking similar steps, imposing higher fees on some physical games compared to digital download versions. Furthermore, expectations regarding the Switch 2 suggest that reducing storage capacities in cartridges may be a way to control costs, but the shortage of major suppliers remains an ongoing challenge.
However, observers believe that the growth of digital sales, which accounted for 61.5% of Nintendo's business in the second quarter of 2026, may offset the impact of these high costs in the long term.