Macronix exits ROM chips for AI data centers, squeezing Nintendo cartridges

By Priya Raman

Macronix, one of Nintendo's key ROM chip suppliers, is shutting down its ROM business to concentrate on flash memory for AI data centers, according to multiple reports. Nintendo faces higher cartridge costs, more Game-Key cards, or a harder push toward digital sales. Macronix will not develop new ROM products, and Q3 is the last quarter it reports ROM sales separately.

The shift is already visible in the numbers. MST Financial analyst David Gibson said on X: "Nintendo's main memory chip maker is quitting the Switch business." He notes that ROM sales fell to 5% of Macronix revenue in Q3 of this year, down from 26% a year earlier. That collapse predates any formal wind-down announcement. Nintendo has not commented publicly on how it plans to replace the capacity.

Where is the money going?

Macronix's capital expenditure plan totals NT$37.8 billion, and Gibson reports none of it is allocated to ROM. The company is directing the full amount toward NOR and NAND flash (two types of non-volatile memory that retain data without power) to supply AI data centers.

The Taipei Times corroborated the report. It quotes a Macronix executive, identified as Wu, saying: "At the same time, Macronix is gradually phasing out of ROM production."

The paper also breaks down the spending in two phases:

• NT$22 billion to expand manufacturing capacity
• An additional NT$15.8 billion for NAND flash used in eMMCs (embedded MultiMediaCard storage, a soldered-down flash module common in portable devices) and 3D NAND

The arithmetic is blunt. AI buyers now outbid cartridge buyers for wafer capacity. Macronix has chosen its customer.

What changes for Nintendo?

Storage costs are already rising, and losing a supplier narrows Nintendo's options. Three consequences follow from Macronix's exit, according to the reports:

• Higher prices on physical game cartridges
• More Game-Key cards, which contain a download key rather than the full game
• A stronger tilt toward digital-only sales

Gibson expects Nintendo's digital margins to grow through more Game-Key cards or digital sales. But he adds a caveat: because Macronix is not Nintendo's only ROM source, "physical cards will likely carry on for some time." Digital margins have been rising slowly, he reports, with quarterly numbers fluctuating whenever major physical game launches occur.

Nintendo is not left without suppliers. ROHM group companies ROHM Semiconductor and LAPIS Semiconductor still provide ROM chips for Switch and Switch 2 cartridges. That makes a digital-only pivot, following the recent strategies of Sony and Microsoft, unlikely in the near term. The immediate risk is price, not availability.

Nintendo does not buy from Macronix directly, which complicates the picture. The fabless chip designer MegaChips designs the ROM chips to Nintendo's specification and outsources manufacturing to Macronix.

Is MegaChips the real loser?

MegaChips, a fabless company (a chip designer that owns no factories and contracts out production), may take the hardest hit. Its own 2022 company report disclosed the concentration risk in plain numbers:

• Nintendo accounted for 87.8% of MegaChips' sales
• Macronix accounted for 67.8% of its outsourced manufacturing purchases

The report stated that if Macronix stopped manufacturing ROM chips, "MegaChips' operating results may be impacted." The same document said there was no sign the risk would become apparent. That assessment has now aged badly. No public contingency plan exists for the loss of Macronix as a manufacturing partner.

One mitigation is plausible but unconfirmed. Macronix and MegaChips have likely discussed the wind-down privately, giving MegaChips time to line up another foundry before the ROM business closes. Neither company has disclosed a transition agreement. Neither has stated a final shutdown date for ROM production.

What is not said?

Three gaps deserve scrutiny. Nintendo has not announced price changes for cartridges or Game-Key cards. Macronix has not published a formal exit schedule beyond ending separate ROM revenue reporting after Q3. MegaChips has not disclosed a replacement manufacturer or an estimate of the financial impact.

For now, the physical game market retains two suppliers and one of its last major publishing platforms. The margin pressure, however, now points in one direction only. AI data centers pay more per wafer than game cartridges do, and Macronix has voted with its capital budget.