A couple of months ago, OpenAI signed a deal with two top memory chip producers in an effort to power the tech company’s massive, state-sanctioned Stargate project. The move was inevitably going to have major consequences for basically every industry, but the brunt of it was certain to hit tech-focused products. Now, we’re starting to get a better sense of how things might shake out in the world of video games — and it’s looking grim.
It’s possible you’ve been hearing that the issue comes down to semiconductors, which can be found in everything from fridges to cars. Tariffs certainly aren’t helping. Every major video game hardware producer has already increased prices this year, sometimes more than once. PC gamers are routinely getting gouged for graphics cards, and bled dry by the newfound demand for RAM chips.
But that was the situation prior to OpenAI securing 40% of the world’s entire semiconductor supply. Everything up until this point, it turns out, has only been a prelude. Last week, Nintendo lost $14 billion in its valuation as investors started getting spooked by what the chip squeeze will mean for the Japanese company’s margins. Multiple components inside the Switch 2 are seeing price increases between 8% to 41% for a console already facing tight profit margins. The big question right now is: Who is going to eat those costs?
Nintendo did not immediately respond to a request for comment, but many of its options aren’t encouraging. Nintendo could look at the Switch 2 as a loss-leader, and only turn the knob on associated costs for the console, like subscriptions, accessories, or digital content. The company could also pull a Microsoft and jack up console prices a second time. But right now, the quirky portable console is breaking sales records; sticker shock could threaten to halt that momentum. It is also not a particularly enticing value proposition to pay more than you might for a PS5 in exchange for less power and a smaller games library.
Nintendo’s investors are surely not the only ones sweating right now. Microsoft has already semi-warned consumers that its next console will be a pricey, high-end machine. Valve has a lot to gain from a situation where it has a product that simplifies the mess that comes with building a PC, but the first challenge might be producing the Steam Machine hardware at all. It may not be a coincidence that the Seattle-based company has yet to announce a price point for its gaming cube.
On the plus side, we’re likely far enough away from the next generation of PlayStation and Xbox consoles that the semiconductor situation could still change for the better. The PlayStation 6’s innards were settled on years ago, but the current slate of consoles from Sony and Microsoft both appear to be in that software lull that tends to happen right before new hardware is in the works. It’s perfectly plausible the next generation of gaming won’t be on shelves anytime soon. That, or the cost consumers will pay for the PS6 is about to make those exorbitant PS5 scalping prices from 2020 look affordable by comparison.
Whatever happens next will probably suck for consumers. But hey, why worry? Once the United States succeeds in building out its proposed extensive AI infrastructure network with OpenAI, ChatGPT will surely be able to fix any problem you might ever have.