Microsoft to raise Xbox console prices worldwide from Aug 1 as AI-driven chip costs surge

Microsoft to raise Xbox console prices worldwide from Aug 1 as AI-driven chip costs surge

Microsoft will increase the price of Xbox gaming consoles worldwide starting August 1, as the artificial intelligence boom drives up the cost of essential memory and storage components. Prices will rise by $100 for 512 GB models and $150 for 1 TB models, according to company statements. In a related move, Microsoft is discontinuing its 2 TB model.

The price hikes will affect various hardware tiers in the United States. The entry-level Xbox Series S 512 GB model will rise from $399 to $500. The 1 TB Series S will increase to $550. For the more powerful Xbox Series X, the 1 TB all-digital version will cost $749, while the disc drive version of the 1 TB Series X will increase from $649 to $799.

Microsoft attributed the decision to a deepening global components crisis. The company stated that console storage and memory prices have already increased by more than 2.5 times, and it expects costs to double again by the fall of 2027.

The company noted that the gaming sector is uniquely vulnerable to these shifts.

"Unlike phones, computers, speakers, and other consumer devices, consoles are typically not sold at a profit, but instead for less than they cost to make."

Xbox, via statement

The supply chain strain is rooted in the rapid expansion of AI data centers, which has diverted memory and storage supply away from consumer electronics. This market is largely dominated by Micron Technology, Samsung, and SK Hynix. Demand has become so intense that Micron decided late last year to fully exit its retail SSD and RAM business.

This is the third price increase for Xbox consoles following a worldwide hike in May 2025 and a subsequent U.S.-only increase in October. Previous price adjustments were attributed to uncertain spending, strong competition, and tariff-induced cost pressures.

Microsoft is not the only electronics giant reacting to the chip shortage. Apple announced substantial price increases for iPads and Macs on Thursday, June 26, 2026. Apple described the demand spike as an unprecedented challenge and stated it could no longer shield customers from the costs driven by AI data center buildouts.

Specific Apple price increases include:

• MacBook Neo (entry-level): $100 increase
• MacBook Air (512GB) and iPad Pro Wi-Fi (256GB): $200 increase each
• MacBook Pro (1TB): $300 increase
• iPad Air (128GB): $150 increase

Apple CEO Tim Cook had warned earlier in the month that such rises were unavoidable. Following the announcement, Apple shares fell 4.5%, dropping $13.29 to $279.88 in afternoon trading.

Other gaming hardware providers are also adjusting. Sony raised the price of the PlayStation 5 in Europe by €100 in early April, bringing the standard version to €650, following a previous hike in August last year. Nintendo has announced a price increase of more than 6% for its Switch 2, effective September 1. Additionally, Valve recently launched its Steam Machine with a base version priced at more than $1,000.

The broader economic pressure on Microsoft's gaming division is evident. The division, which represented about 8% of company revenue during fiscal year 2025, underwent a major restructuring in February due to disappointing new game performance and declining Xbox sales. Bloomberg News has reported that Xbox plans to implement significant cuts to marketing and other budgets, as well as major layoffs, next month.

While hardware prices are rising, Microsoft previously lowered the cost of its Xbox Game Pass subscription in April after users considered the service too expensive.

Industry analysts suggest the trend of rising costs may extend further. Nabila Popal of IDC stated that the current increases were larger than expected and suggested that iPhone Pro and Pro Max models could see price hikes of as much as $200.

The component crisis arrives as the industry prepares for new hardware cycles. Reports indicate Sony management is considering a delay for the PlayStation 6 release as the next generation of consoles is developed.