Macronix ROM Exit Puts Nintendo Game Card Costs in Focus as AI Memory Demand Surges

A shrinking chip business with a large gaming footprint

Macronix is preparing to phase out its ROM chip business after the memory used in Nintendo Switch game cards fell to 5% of its quarterly sales, down from 26% a year earlier. The Taiwanese manufacturer's shift toward other memory products could make physical games more expensive to produce, although Nintendo has announced no resulting change to cartridge prices or availability.

Chairman Miin Wu announced the gradual withdrawal at an October 27 earnings briefing. Macronix reported revenue of NT$24.237 billion for the July to September 2026 quarter, with NAND memory contributing 47%, NOR memory 46%, ROM 5% and contract manufacturing 2%.

For Macronix, the decision concerns a small and shrinking part of a business enjoying record profit. For Nintendo, publishers and players, it concerns the chips that allow a game to arrive on a card rather than require a full download.

The immediate commercial pressure may fall on MegaChips, the Japanese chip designer that has connected Nintendo's requirements with Macronix's manufacturing. Its historical disclosures show how closely those relationships were tied together.

Several important details remain unresolved: the final production deadline, the volume Nintendo buys through this supply chain, the capacity available elsewhere and whether Macronix currently supplies ROM for Switch 2 cards. Those gaps make a precise forecast of prices or supply difficult.

Why Macronix is changing its priorities

Macronix recorded quarterly net profit of NT$10.95 billion, compared with a loss of NT$862 million a year earlier. Its gross margin, the share of sales left after production costs, reached 70.5%, up from 13.5% in the corresponding quarter of 2025.

NAND and NOR together supplied 93% of revenue, compared with ROM's 5%. Using those published shares, the two flash memory businesses generated about 18.6 times as much revenue as ROM. Their growth helps explain why management is directing investment toward them.

ROM revenue was approximately NT$1.2 billion, down 39% from a year earlier. NAND revenue rose 768%, while NOR increased 158%. ROM's declining share therefore reflects both falling sales in that business and rapid expansion elsewhere.

ROM still grew 9% compared with the preceding quarter. Demand has fluctuated rather than simply disappearing, even as management has chosen to move resources toward other products.

Wu's explanation at the earnings briefing centered on limited resources and a priority for NOR and eMMC. Customers are also seeking more NOR for data centers, connecting the factory allocation decision to demand associated with artificial intelligence infrastructure.

What these different memory chips do

ROM stands for read only memory. In a conventional game card, it holds the game data that the console reads during play. Players cannot rewrite that game data as they would files on a storage drive.

NOR and NAND are forms of flash memory, which retain information when power is switched off. NOR commonly holds instructions that electronic devices need to start and operate. NAND provides storage for larger amounts of data.

Macronix is also investing in eMMC, which combines flash storage and a controller in one package, and 3D NAND, which stacks memory cells in layers to increase storage capacity.

The practical connection is factory space, equipment and investment. Macronix has already converted its fabrication plant using 8 inch wafers to NOR production. Moving existing facilities to another product changes the resources available for ROM while new manufacturing capacity takes time to arrive.

NT$37.8 billion of investment follows the shift

Macronix plans capital spending totaling NT$37.8 billion in two stages. The first, worth NT$22 billion, is expected to begin production in the second half of 2027. A further NT$15.8 billion is expected to start production in 2028, with equipment delivery delays affecting the schedule.

The spending is directed toward flash memory, including eMMC and 3D NAND, rather than new ROM products. MST Financial analyst David Gibson has said none of the planned capital expenditure is allocated to ROM.

Wu said new equipment takes at least a year to come online. Macronix consequently expects its near term earnings growth to come mainly from higher prices rather than a large increase in output.

For game publishers, that timing matters. Building new capacity elsewhere or moving a chip to a different manufacturer involves production planning, technical work and commercial negotiations. A gradual withdrawal gives customers a transition period, but the terms of replacement supply will help determine their costs.

The phase out timetable needs careful reading

Gibson, an analyst at MST Financial who follows the company, described both the product decision and the change in financial reporting:

Macronix, which makes the ROM chips in Switch 1 and Switch 2 game memory cards, is phasing out that business. There will be no new ROM products, and Q3 is the last quarter it reports ROM sales separately.

The end of fiscal third quarter 2026 has also been cited as the production cutoff. However, the account of Wu's October 27 briefing describes a gradual withdrawal without a specific end date. The stated reporting change is that ROM will cease to appear as a separate business line from the next earnings briefing.

The main dates trace a transition extending beyond the current reporting period:

• 2019: Macronix's XtraROM chips were identified in original Switch game cards, and the company said Nintendo demand exceeded expectations.
• 2022: MegaChips disclosed heavy sales exposure to Nintendo and manufacturing purchases from Macronix.
• July to September 2026: ROM represented 5% of Macronix revenue.
• October 27, 2026: Wu announced the gradual ROM withdrawal at an earnings briefing.
• Second half of 2027: Production is expected to begin from the NT$22 billion investment phase.
• 2028: Production from the additional NT$15.8 billion investment is expected to begin.

MegaChips sits between Nintendo and the factory

MegaChips designs chips around Nintendo's requirements and has commissioned Macronix to manufacture them. That makes the Japanese company an important part of the transition, rather than leaving Nintendo alone to arrange a replacement.

In its 2022 company information, MegaChips said Nintendo accounted for 87.8% of revenue. Macronix represented 67.8% of its outsourced manufacturing purchases. Those historical figures show the scale of the relationship at that time; current purchasing shares have not been disclosed here.

MegaChips may need another manufacturing partner as Macronix withdraws. Its specific response, including any replacement agreements or production transfer schedule, has not been announced.

ROHM and its related semiconductor businesses, including LAPIS and the former Oki Semiconductor operations, have been identified as other sources of Nintendo ROM components. Their available capacity and share of Nintendo's purchases are not public.

Gibson has said physical cards are likely to continue because Macronix is not Nintendo's only supplier. Nintendo also said in October that it had no plans to abandon physical games.

Why a 64GB card can be difficult to justify

Switch 2 publishers were already weighing cartridge costs before this latest manufacturing shift. Nintendo reportedly narrowed its game card capacity lineup to 64GB, leaving publishers with a substantial storage package even when their game needs much less space.

A smaller game can therefore face the cost of a larger card. That expense is harder to absorb when the retail price is low, because less money is available to cover manufacturing, distribution and other costs.

Ken Berry, chief executive of Marvelous USA, described the problem for less expensive releases. He said a full 64GB card:

may still not make financial sense on smaller releases that have a price point under $50.

A change in suppliers could add another cost pressure. Publishers could respond through their choice of physical format, the price of a boxed edition or the balance between physical and digital sales. Nintendo has already used different physical and digital prices for some Switch 2 games.

No cartridge price increase tied to Macronix's decision has been announced. The financial effect will depend on replacement manufacturing prices, order volumes and the storage options Nintendo makes available.

What Game-Key Cards change for players

Game-Key Cards provide a way to sell a physical product without storing the complete game on the card. The player inserts the card and downloads the game over an internet connection before first playing.

The format still includes a physical card. Its role is to provide access to the game rather than carry all of the game's files, reducing the need for a large ROM chip.

For publishers, that can change the manufacturing calculation. For players, it moves more of the initial process onto their internet connection and console storage. A purchase that arrives in a box can still require a substantial download before play begins.

Gibson expects the shift at Macronix could encourage greater use of Game-Key Cards and digital downloads. Nintendo has not announced a format change in response to the ROM withdrawal.

The scale of Nintendo's audience makes those choices consequential. Nintendo reported 23.68 million Switch 2 consoles sold worldwide through June 30, alongside 156.59 million original Switch consoles. Players who choose boxed games will encounter the consequences through download requirements, available editions and retail prices.

A long relationship meets a changing memory market

Macronix's relationship with Nintendo extends beyond the current cartridge debate. In 2019, its XtraROM technology was identified in Switch game cards, while its flash memory was also used in Joy-Con controllers and the dock.

Macronix described demand from Nintendo enthusiastically at the time:

Nintendo's orders have exceeded our expectations, and demand is better than we thought.

Seven years later, the company is directing investment toward products serving a different demand cycle. Strong growth in NAND and NOR, higher selling prices and requests for data center memory have changed the relative size of its businesses.

Other manufacturers are also changing their exposure to consumer products. Micron announced that it was leaving the consumer memory business and shutting down its Crucial brand. In physical entertainment media, Sony plans to end disc manufacturing in 2028.

Nintendo has stated a different position on physical games, saying it intends to retain them. Keeping that commitment will involve commercial choices about suppliers, card capacity and which releases contain the complete game.

For buyers, the most useful developments will be concrete announcements: changes to cartridge availability, new physical edition prices, publisher decisions on Game-Key Cards and any manufacturing arrangements disclosed by Nintendo or MegaChips. For now, the confirmed direction is a retreat from ROM at Macronix, with the effects on individual games still unsettled.

Key Points

• Macronix is gradually withdrawing from ROM after the business fell to 5% of quarterly revenue, from 26% a year earlier.
• NAND and NOR supplied a combined 93% of revenue in the July to September 2026 quarter.
• The company plans NT$37.8 billion of investment focused on flash memory, with new production expected in 2027 and 2028.
• MegaChips faces a manufacturing transition because of its historical role designing Nintendo chips for production by Macronix.
• Nintendo has other identified ROM suppliers and has said it has no plans to abandon physical games.
• Game-Key Cards still contain a physical card, but require a download rather than holding the complete game.
• Nintendo has announced no cartridge price increase or format change resulting from Macronix's withdrawal.