Macronix Ditches ROMs to Chase Data Center Boom

Macronix is pulling out of the Read-Only Memory business to chase the higher margins available in data center infrastructure. The decision creates an immediate supply chain problem for Nintendo, which relies on these specific chips for its Switch game cartridges. The move signals a hard pivot in the semiconductor industry toward artificial intelligence hardware.

The company disclosed the strategic shift during its third-quarter earnings call. The financial data shows a stark contrast between the declining legacy product and the booming new segments. ROM revenue fell by 39 percent compared to the same period last year. In the same timeframe, revenue from NOR memory rose by 158 percent. NAND memory sales surged even higher, jumping 768 percent year over year.

Miin Wu, chairman and CEO of Macronix, attributed the change to intense market pressure. He stated that customers are actively seeking more capacity for NOR flash used in data centers. Wu noted that these buyers are pressing the company to deliver additional solutions to meet their infrastructure needs. The demand for this specific type of memory is driving the production realignment.

Macronix expects price increases for its chips to continue in the near term. This pricing trend reflects current market dynamics where specialized memory for AI and data storage drives profitability. The company is aligning its production capabilities with the highest-growth segments of the tech industry to maximize returns.

For Nintendo, the exit of a major supplier is a tangible challenge. The Japanese gaming company remains committed to physical media, distinguishing itself from competitors who are moving toward digital-only models. Nintendo recently stated it has no plans to abandon physical games. This stance contrasts with Sony, which announced it will cease production of physical game discs starting in January 2028.

Physical titles still account for a large share of Nintendo's revenue. In August, the company reported that physical games made up 38.5 percent of its total games sales. This figure is higher than that of other major publishers like Capcom, which rely more heavily on digital distribution. Nintendo must now secure alternative suppliers for the specific ROM chips used in its cartridges to maintain its release schedule.

The shift follows a similar trend seen earlier in the industry. Nearly a year ago, Micron shut down Crucial, its consumer brand for RAM and solid-state drives. Micron made that decision to refocus its efforts on meeting the growing demand for memory in AI data centers. The departure of another major supplier suggests the balance of power in the memory market is shifting decisively toward data center infrastructure.