Macronix Drops Nintendo ROM Chips Amid Data Center Demand

Nintendo faces new supply chain hurdles as its primary ROM chip manufacturer phases out production amid surging demand for data center memory. The semiconductor shift threatens to impact physical game cartridge availability and costs for the original Switch and upcoming hardware.

Semiconductor manufacturer Macronix announced in its third-quarter earnings report that its ROM chip production has reached its end and the company will gradually decouple from the gaming industry, Ars Technica reported. CEO Miin Wu confirmed the decision during financial disclosures, noting that customers have issued heavy demands for NOR flash memory used in data centers, according to Engadget. The company's ROM business has shrunk by 39 percent over the past year, with Eurogamer pointing out that these products now represent just five percent of total sales, down sharply from 26 percent at the same time last year.

Analyst David Gibson highlighted that Macronix serves as the main memory chip maker for physical Nintendo cartridges. With production capacity capped at 25,000 twelve-inch wafers per month, less profitable ROM chips are losing wafer space to more lucrative components like NOR- and NAND-based memory and eMMCs, Ars Technica reported. Planned new capacity of $1.2 billion will take a year or more to spin up, leaving the company focused on higher-demand tech sectors.

Nintendo still relies on alternative suppliers like Rohm Co. and Lapis Semiconductor for remaining ROM chips, providing a buffer against total supply failure. However, losing a major partner creates extra strain that could drive up production expenses, Eurogamer noted. Earlier this year, Nintendo began charging more for certain physical releases compared to digital equivalents, raising concerns about future price hikes for consumers and publishers alike.

Background

The semiconductor industry has faced intense global pressure due to the artificial intelligence boom, which has driven massive demand for memory and storage components. These shortages have continuously impacted pricing and availability across consumer electronics, ranging from PC RAM and GPUs to game consoles.

Despite mounting pressure on physical media, Nintendo stated last month that it has no plans to abandon game cartridges in the near future. This stance contrasts with rival hardware manufacturers, as digital downloads account for 85 percent of software sales on the PlayStation 5 and an overwhelming 96 percent on Xbox platforms, Engadget reported. Sony recently announced plans to end physical disc manufacturing entirely by 2028.

Nintendo's digital software sales already represented 61.5 percent of its business in the second calendar quarter of 2026, marking a steady increase from the previous year. If digital adoption continues to accelerate, lowered demand for physical cartridges could eventually balance out rising manufacturing expenses, Ars Technica reported. Alternatively, industry analysts suggest rising costs might push more publishers to utilize Game-Key Cards that omit physical cartridges altogether.

Why It Matters

The departure of a major supplier from the ROM market highlights how broader semiconductor shortages driven by artificial intelligence infrastructure can ripple down into consumer entertainment. As physical media components become scarcer and costlier to manufacture, players and publishers may see a faster industry-wide transition toward all-digital libraries.

Illustration: AI-generated image, not a photograph of the event.