Microsoft raises Xbox console prices due to chip costs

SAN FRANCISCO: Microsoft said Thursday it will raise the price of its Xbox video game consoles worldwide by US$100 to US$150 starting Aug 1, blaming a component-cost surge fueled by artificial intelligence.

In the US, the cheapest Xbox, the Series S, will increase to US$500 this summer, and the Series X will increase to as much as US$800. The company has not yet released prices for Europe, where the Series X currently sells for around €600.

The 2 terabyte model will be discontinued.

This is the third price increase for Xbox after a worldwide hike in May 2025 and a second, limited to the US, in October.

All consumer electronics are affected by price hikes for tech components: in recent months, Sony and Nintendo have also raised the prices of their game consoles, and Apple announced on Thursday substantial increases for its Macs and iPads.

The accelerated construction of data centers for AI training and applications has sent the cost of memory and storage chips soaring. They are found in virtually all electronic devices.

This market — dominated by giants such as South Korea’s Samsung and SK Hynix and US-based Micron — has suffered from major shortages for several months, which has driven prices up.

The cost of storage and memory has more than doubled and is expected to double again by late 2027, Microsoft said on Thursday.

The Redmond, Washington–based company also noted that consoles, unlike phones or computers, “are typically not sold at a profit, but instead for less than they cost to make.”

Its Japanese rival Sony raised the price of its PlayStation 5 by €100 in Europe in early April, bringing the standard version to €650.

Nintendo has announced an increase of more than 6% as of Sept 1 for its Switch 2. On Monday, US-based Valve launched its new Steam Machine at over US$1,000 for the base version, more expensive than expected.

The third-largest console maker after Sony and Nintendo, Microsoft had conversely cut the price of its Xbox Game Pass subscription in April, which players considered too expensive.

Microsoft’s gaming division, which accounted for about 8% of its revenue in its fiscal year 2025, underwent a major restructuring in February amid declining revenue, particularly from Xbox sales, and disappointing performance from new games.