No console-flation: how the thirst for AI chips is sending games console prices soaring
Summary
Video game console prices are rising because of a strong demand for computer chips used in artificial intelligence (AI) systems. Companies like Sony and Microsoft are increasing prices as chip makers focus on supplying data centers, causing shortages and higher costs for consoles. This trend is expected to continue, with new consoles possibly costing $1,000 or more.Key Facts
- Sony raised the PS5 price by £90 in March, and Microsoft will increase Xbox Series S and X prices by at least £75 from August.
- The original consoles were released in 2020, but prices are now going up instead of down.
- High demand for AI-related chips has caused semiconductor and memory prices to nearly double twice since late 2022.
- Three main companies (Samsung, SK Hynix, Micron) control most memory production, and building new factories will take until about 2028.
- Increased costs have led to lower console sales, with Xbox recording its worst May ever and PS5 sales down 58% year-on-year in the U.S.
- Analysts predict the next-generation PlayStation 6 could cost around $1,000.
- Microsoft offers payment plans to help make consoles more affordable.
- Cloud gaming could become more popular as high console prices push consumers toward streaming games instead of buying hardware.
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