Core Viewpoint - The surge in memory prices is significantly increasing the cost of consumer electronics, leading to higher retail prices and impacting the consumer market. Consequently, TrendForce has revised its 2026 global gaming console shipment forecast down from a year-over-year decline of 3.5% to a decline of 4.4% [1][5]. Group 1: Impact on Gaming Consoles - The gaming console market is affected by rising memory prices, which are compressing hardware margins and limiting promotional pricing strategies. For instance, the Nintendo Switch 2 is priced at $450, higher than its predecessor, due to increased memory capacity and costs [2][5]. - The cost of memory modules is projected to account for 21-23% of the total cost of gaming consoles by 2026, indicating a significant impact on profitability for manufacturers like Nintendo [2][4]. - Sony and Microsoft are also facing similar challenges, with memory costs expected to exceed 35% of their bill of materials (BOM) by 2026, which may force them to raise prices instead of following traditional price reduction strategies [4][5]. Group 2: Market Dynamics and Forecast - The inability to lower retail prices in line with product lifecycle may adversely affect promotional strategies in 2026, particularly for mature products like the PS5 and Xbox Series, which may see reduced consumer demand [5][6]. - The gaming console market's shipment forecast has been revised down to a year-over-year decline of 4.4%, reflecting the challenges posed by supply chain issues and rising component costs [5][6]. - Historical precedents show that supply chain disruptions, such as semiconductor shortages, have previously led to significant reductions in production targets for major gaming consoles [5][6].

Core Insights - The report from TrendForce indicates that the surge in memory prices has significantly increased the costs of consumer electronics, leading to higher retail prices and impacting the consumer market [1] - TrendForce has revised down its forecast for global smartphone and laptop shipments for 2026, and has also lowered the forecast for game console shipments from a previously estimated decline of 3.5% to a decline of 4.4% [1] - Game consoles are particularly affected by rising memory prices, as their profitability primarily comes from software and membership services, and they have historically relied on strategies of gradually lowering product prices or offering promotions to boost sales [1]