Microsoft to Raise Xbox Console Prices by $100 Amid Soaring AI Chip Costs

Microsoft to Raise Xbox Console Prices by $100 Amid Soaring AI Chip Costs​

Microsoft announced Thursday that it will be increasing the price of its Xbox video game consoles globally starting August 1, citing a surge in component costs driven primarily by artificial intelligence (AI) technology. The pricing adjustments represent a significant shift for the gaming division, marking the third such hike following increases in May 2025 and a prior adjustment limited to the United States.

Price Hikes Detailed for Xbox Consoles​

In the United States, the Series S console is set to increase to $500 this summer. The premium Series X model will see its price rise up to $800. Details regarding pricing for Europe have yet to be released, although the Series X currently sells in Europe for approximately 600 euros. Furthermore, the 2 terabyte version of the console will be discontinued as part of these updates.

The move comes as consumer electronics manufacturers across the industry grapple with cost pressures. Sony and Nintendo have recently implemented price increases for their respective game consoles. Apple has also announced substantial price hikes for its Macs and iPads, indicating a broad trend affecting high-tech hardware production globally.

AI Infrastructure Fuels Component Cost Explosion​

Microsoft attributed the necessary price increase to the accelerated construction of data centers required for AI training and applications. This infrastructure boom has driven up the costs of memory and storage chips, which are integral components found in nearly all electronic devices.

The supply chain market for these critical components is heavily influenced by giants such as South Korea’s Samsung, SK Hynix, and US-based Micron. These companies have navigated several months marked by major shortages, resulting in the exponential rise of chip prices. Microsoft stated that the cost of storage and memory has more than doubled and is projected to double again by late 2027.

Broader Industry Response and Gaming Division Shifts​

The Xbox price increase mirrors a growing trend across the wider technology industry. Rivalry continues as Sony's Japanese division raised its PlayStation 5 price by 100 euros in Europe earlier this year, setting the standard version at 650 euros. Nintendo has also planned an increase of more than 6% for its Switch 2 starting September 1. Meanwhile, Valve introduced its new Steam Machine at over $1,000 for the base version, a figure that exceeded market expectations.

For Microsoft, this announcement is part of a period of internal restructuring. The gaming division generated about 8% of the company’s revenue in fiscal year 2025. This division underwent a major overhaul in February amidst declining revenues and disappointing sales performance from new games. Interestingly, before the price increase, Microsoft had conversely cut the cost of its Xbox Game Pass subscription in April to address previous consumer concerns regarding its price point.