What the analyst reported
David Gibson, a games analyst at MST Financial, said late on Tuesday that Macronix, the main manufacturer of flash memory used in Nintendo's Switch game cards, is "quitting the Switch business." Gizmodo reported the claim, which Gibson also posted on social media.
According to Gibson, Macronix makes the ROM chips found in both Switch 1 and Switch 2 game memory cards and is phasing that business out. He wrote that there will be no new ROM products and that the third quarter is the last in which the company reports ROM sales separately.
Why Macronix is stepping away
Gibson attributed the decision to money. Game card chips are not a large profit source for the company, he said. ROM storage made up less than 5% of Macronix's sales last quarter, compared with 23% a year earlier.
The company's other lines, eMMC and NAND storage, are growing and now eclipse sales of the small storage product used in Nintendo's physical games, according to the report.
What it could mean for Nintendo and publishers
Macronix is not Nintendo's only memory supplier for cartridges, but it was the main one. If Nintendo does not find a replacement, Gizmodo noted, future game card releases could be affected. Gibson said the impact may not be immediate, but having fewer suppliers will likely push Nintendo to emphasize digital games more strongly.
Third-party publishers may feel the effects most. Gizmodo reported that many developers and publishers already use game-key cards, which hold almost no game data and act as a form of physical digital rights management. Players must insert the card to download and play the game. The outlet noted that their main benefit is that they can be traded or sold, though a game's value remains tied to Nintendo's servers staying online.
The article also said the latest Switch 2 cards come in sizes up to 64GB, and anything needing more memory will cost more to produce. Gizmodo's author pointed to a broader memory shortage as a strain on the supply chain for physical games. Titles such as The Elder Scrolls V: Oblivion Remastered and Indiana Jones and the Great Circle, which are housed entirely on the card, sold out quickly after launch.
The state of physical games
Circana chief gaming analyst Mat Piscatella said U.S. physical game sales rose slightly this year, mostly thanks to Switch 2, while the "overwhelming" majority of game sales are digital. In June, he wrote that there is "likely have less than a decade left of physical software."
Nintendo has also begun charging a $10 premium for physical cards compared with digital versions. Gizmodo cited Fire Emblem: Fortunes Weave, which costs $70 digitally and $80 physically. In its August earnings report, Nintendo said just under 60% of sales on its platforms were digital.
What happens next
Nintendo's next earnings call is set for this week, and Gizmodo said more may be learned about Macronix then. The source material does not include a statement from Nintendo or Macronix on the report.
