Macronix, a key supplier of ROM chips for Nintendo Switch and Switch 2 game cartridges, is reportedly phasing out its ROM business to focus on manufacturing NOR and NAND flash chips for AI data centers. According to reports from MST Financial and the Taipei Times, the company is shifting its manufacturing capacity toward the growing demands of artificial intelligence. Macronix's ROM sales dropped to 5% in the third quarter of this year, down from 26% during the same period last year.
The company's capital expenditure is being redirected toward NOR and NAND flash production. The Taipei Times reported that the NT$37.8 billion expenditure is split into two phases: NT$22 billion for expanding manufacturing capacity and an additional NT$15.8 billion for NAND flash used in eMMCs and 3D NAND. This shift leaves no capital allocated for ROM production. David Gibson of MST Financial reported on X, stating, "Macronix, which makes the ROM chips in Switch 1 and Switch 2 game memory cards, is phasing out that business."
While the move could impact the availability of physical game media, the transition may not lead to an immediate shift toward digital-only sales. ROHM group companies ROHM Semiconductor and LAPIS Semiconductor continue to supply ROM chips to Nintendo. Consequently, the company is unlikely to move to a digital-only model in the near future like Sony or Microsoft. However, the reduction in suppliers may force Nintendo to increase the price of physical games or rely more heavily on digital purchases and Game-Key cards.
The shift also poses a significant risk to MegaChips, a fabless chip design company. Nintendo does not purchase ROM chips directly from Macronix; instead, MegaChips designs the chips to Nintendo's specifications and outsources the manufacturing to Macronix. A 2022 MegaChips company report noted that Nintendo accounted for 87.8% of its sales, while Macronix accounted for 67.8% of its outsourced manufacturing purchases. The report previously warned that if Macronix were able to manufacture ROM chips itself, MegaChips' operating results might be impacted, though the company stated at the time there was no sign that such a risk would become apparent.
