Macronix Exits ROM Chips for AI Flash, Threatening Switch Cartridge Supply

Macronix, the Taiwanese chipmaker that supplies the ROM chips inside Nintendo Switch and Switch 2 game cartridges, is shutting down its ROM business to redirect capacity toward flash memory for AI data centers, according to multiple reports.

The shift is already visible in the numbers. Macronix's ROM sales fell to 5% of revenue in the third quarter of this year, down from 26% a year earlier. The company will report ROM sales separately for the last time in Q3 and will release no new ROM products.

The financial commitment behind the move is NT$37.8 billion in capital expenditure, all of it allocated to NOR and NAND flash, with nothing earmarked for ROM. The Taipei Times corroborated the plan and detailed its two phases: NT$22 billion to expand manufacturing capacity, followed by an additional NT$15.8 billion for NAND flash used in eMMC modules and 3D NAND.

Why is a game cartridge supplier chasing AI data centers?

The mechanism is simple. NOR and NAND flash command stronger demand and better pricing as data centers build out AI infrastructure. Macronix has finite wafer capacity, so every line it converts to flash is a line that no longer makes mask ROM chips for game cartridges.

David Gibson, an analyst at MST Financial, framed the departure bluntly on X: "Nintendo's main memory chip maker is quitting the Switch business." He added that Macronix "is phasing out that business. There will be no new ROM products, and Q3 is the last quarter it reports ROM sales separately."

Storage costs are already climbing, and losing a major supplier gives Nintendo three unattractive options: raise cartridge prices, push more Game-Key cards — cartridges that contain a download key rather than the full game — or accelerate the shift toward digital sales.

What does this mean for physical Switch games?

The immediate risk falls on pricing rather than availability. Macronix is not Nintendo's only ROM source. ROHM group companies ROHM Semiconductor and LAPIS Semiconductor still supply ROM chips to Nintendo, which makes a near-term move to digital-only distribution unlikely. Sony and Microsoft have both moved in that direction, but Nintendo still sells physical cartridges at scale.

Gibson takes a measured view: because other suppliers remain, "physical cards will likely carry on for some time." He also notes that Nintendo's digital margins have been rising gradually, with the figure fluctuating quarter to quarter depending on major physical game launches. He expects digital margins to keep growing through more Game-Key Cards or digital-only sales.

Who loses most beyond Nintendo?

The most exposed party may be MegaChips, the Japanese fabless designer that sits between Nintendo and Macronix. Nintendo does not buy ROM chips from Macronix directly. MegaChips designs the chips to Nintendo's specification and, because it owns no fabs, contracts the manufacturing to Macronix.

The concentration is striking. MegaChips' own 2022 company report states that Nintendo accounted for 87.8% of its sales, while Macronix accounted for 67.8% of its outsourced manufacturing purchases. The same document warned that if Macronix stopped manufacturing ROM chips, "MegaChips' operating results may be impacted." The 2022 filing saw no sign of that risk materializing; it now has.

MegaChips' contingency plan is not publicly known. It is reasonable to assume Macronix and MegaChips have discussed the wind-down and that MegaChips has been given time to line up another manufacturer before the ROM line closes entirely, but no such arrangement has been confirmed.

What happens next?

Nintendo's physical game business survives this change, but on worse terms. With one fewer supplier in a market where storage is already getting more expensive, cartridge prices look set to rise and Game-Key cards look set to multiply, tightening the squeeze on the last major holdout for boxed games.

By Tom Whitfield