Macronix Quits Nintendo ROM Chip Business to Focus on AI Data Centers

Nintendo is losing a key supplier of ROM chips as Macronix phases out that part of its business to concentrate on memory chips for AI data centers. The shift could lead to higher prices for physical game cartridges, an increase in Game-Key cards, or a greater push toward digital purchases.

David Gibson of MST Financial reported on X that Macronix is quitting the Nintendo Switch business. According to the report, the third quarter of the year will be the last time Macronix reports its ROM sales separately. Gibson noted that Macronix's ROM sales dropped to 5% this year, down from 26% last year. The company is putting its capital into NOR and NAND flash memory instead, leaving no room for ROM production as it shifts manufacturing capacity toward artificial intelligence needs.

The *Taipei Times* corroborated the report, stating that Macronix is gradually phasing out ROM production. The publication reported that Macronix's capital expenditure is split into two phases: NT$22 billion for expanding manufacturing capacity, followed by an extra NT$15.8 billion for NAND flash used in eMMCs and 3D NAND.

Gibson expects that Nintendo's digital profit margins will grow through more Game-Key cards, which hold a download key rather than the game itself, or through digital-only sales. However, because Macronix is not the only source of ROM chips, physical cards will likely continue for some time. Other companies, such as ROHM Semiconductor and LAPIS Semiconductor, still supply ROM chips to Nintendo. This means Nintendo is unlikely to switch entirely to a digital-only format like Sony and Microsoft have recently planned. Even so, losing one major supplier may force Nintendo to raise prices on physical games.

The shift away from consumer hardware also impacts fabless chip design company MegaChips. Nintendo does not buy ROM chips from Macronix directly; instead, MegaChips designs the ROM chips according to Nintendo's needs and outsources the manufacturing to Macronix. A 2022 MegaChips company report showed that Nintendo accounted for 87.8% of its sales, while Macronix accounted for 67.8% of its outsourced manufacturing purchases. That same report noted that if Macronix ever stopped manufacturing ROM chips, MegaChips' operating results could be affected. While the risk has now materialized, it remains unclear what contingency plan MegaChips has in place.

Summary

As major chip suppliers redirect their manufacturing factories toward profitable AI data center components, everyday consumer electronics face tighter supplies and potential price increases. For Nintendo and its partners, losing a primary ROM chip maker could change how physical and digital games are sold and priced in the future.