Macronix to end ROM chip production, impacting Nintendo Switch cartridge supply

Taiwanese semiconductor manufacturer Macronix has announced it is ceasing production of ROM chips, a decision that directly impacts the supply chain for physical Nintendo Switch game cartridges. In its third-quarter earnings report, the company stated that its ROM production has reached its end and that it will begin gradually decoupling from the game industry. This announcement, confirmed by CEO Miin Wu, marks the end of a significant segment of Macronix’s business, which previously supplied the memory chips used in Switch 1 cartridges. The company will no longer report ROM sales separately after the third quarter of 2026, signaling a complete exit from this specific market segment.

The decision is driven by shifting market demands and financial performance. Macronix reported a record-high net profit of $337 million for the third quarter of 2026, largely attributed to strong demand for NOR flash memory used in data centers. According to Wu, many new customers have issued specific demands for this type of memory. Consequently, the less profitable ROM chip production, which has shrunk by 39 percent over the past year, is being displaced by more lucrative chip types. ROM chips now represent just five percent of Macronix’s total business, down from 26 percent a year earlier. With production capacity fixed at 25,000 12-inch wafers per month and new capacity taking over a year to become operational, the company is prioritizing high-demand products like NOR and NAND-based memory and eMMCs over lower-margin ROM chips.

Background

Macronix has been identified by analyst David Gibson as Nintendo’s main memory chip maker for physical game cartridges. The shift away from ROM production is part of a broader industry trend where the artificial intelligence sector’s insatiable demand for memory and storage has caused shortages and price increases for various PC components, including RAM, SSDs, and GPUs. This squeeze on supply is now extending to the gaming hardware sector. While the immediate impact is on Switch 1 cartridges, which rely on ROM technology, the situation differs for the Nintendo Switch 2. Switch 2 cartridges utilize NAND flash memory, a market segment that Macronix is not phasing out. Therefore, the direct supply disruption is more acute for the older console format. Nintendo has previously stated that it has no plans to abandon physical game cartridges in the near future, distinguishing its strategy from Sony, which has moved toward ending physical media sales for the PS5.

Why it matters

The exit of a primary supplier could lead to increased production costs for physical Switch 1 games. As Nintendo is forced to rely on alternative suppliers such as Rohm and Lapis Semiconductor for its remaining ROM chips, the cost of manufacturing cartridges may rise. This could result in higher retail prices for physical games, a trend that has already begun, with Nintendo charging more for some physical titles than their digital counterparts earlier this year. The financial viability of physical media is further challenged by the growing dominance of digital sales. In the second calendar quarter of 2026, digital software accounted for 61.5 percent of Nintendo’s business, a slight increase from the previous year. This figure is lower than the 85 percent digital share on Sony’s PS5 and the 96 percent on Microsoft’s Xbox platforms, but the trajectory suggests a continued decline in demand for physical ROM-based cartridges. If digital sales continue to grow, the reduced demand for ROM chips may eventually balance out the increased production costs.

What happens next

Macronix will continue to focus its manufacturing resources on high-demand memory types for data centers and other high-margin applications. For Nintendo, the immediate next step involves managing the transition to alternative ROM chip suppliers to ensure a steady supply for Switch 1 cartridges. There are no announced dates for when new ROM chip production lines from other manufacturers might fully compensate for Macronix’s exit, but the company’s existing production capacity constraints suggest that the supply landscape will remain tight in the short term. Nintendo has not announced any changes to its physical media strategy in response to this specific supply chain shift, maintaining its commitment to cartridges for the foreseeable future.