Abstract:
Taiwan's Macronix, a well-known memory chip supplier in the industry, recently announced that the company will gradually withdraw from the ROM chip business, and will subsequently shift products and investments to flash memory products such as NAND and NOR, which are more profitable and have greater market demand.
Macronix is also an important supplier of memory chips used in Nintendo Switch game cartridges. This adjustment may affect the purchase cost and supply arrangements of future physical game cartridges. Chairman Macronix said at the performance briefing that demand for NOR flash memory from data center customers is very strong.
The proportion of ROM business continues to decline, and production capacity is shifting to flash memory business:
ROM is a memory chip used to save fixed data. This type of chip is often used in products such as game cartridges. The physical game cartridges of Nintendo's original Switch have long used ROM and other storage technologies, and Macronix Electronics is an important supplier of Nintendo game cartridges.
Macronix recently stated at a performance briefing that the company will gradually withdraw from the ROM business and will no longer develop new ROM products in the future. Currently, the ROM business accounts for 5% of Macronix’s revenue. It previously accounted for about 26%. At least for Macronix, there is no future for continuing to do the ROM business.
It should be noted that the drop from 26% to 5% here refers to the revenue ratio. The shipment volume of ROM-related chips does not necessarily mean a sharp decline. It is possible that Macronix’s other business revenue is growing rapidly, which will cause the revenue ratio of the ROM business to continue to decline.
Demand for NOR storage is very strong among data center customers:
Macronix also admitted that the company is investing resources in flash memory products with higher demand and profit. At this stage, the demand for NOR flash memory from data center customers is very strong, and customers are striving for more production capacity. Therefore, Macronix also plans to expand production capacity for eMMC and 3D NAND.
Macronix’s latest quarterly net profit reached NT$10.95 billion, with an overall gross profit margin of 70.5%. As AI infrastructure drives up the demand for memory chips, memory chip suppliers such as Macronix are also actively adjusting the allocation of production capacity between different products, with the goal of shifting to data center products with higher demand and profits.
Nintendo will continue to provide physical game cartridges:
Macronix mainly provides ROM chips for Nintendo's original Switch handheld game cartridges. Macronix's withdrawal from this business will not have a significant impact on the market. At most, it will only have a slight impact on Nintendo's physical game supply chain, but Nintendo also has many different suppliers.
And the Nintendo Switch 2 handheld game card already uses NAND flash memory chips instead of traditional ROM chips. For Nintendo, there are multiple suppliers of NAND chips themselves, and Macronix also supplies NAND chips, so this should have little impact on Nintendo.
In addition, the manufacturing and sales costs of physical game cartridges are rising, and more and more game publishers are choosing to release digital versions. For example, Sony has decided to stop producing physical game discs, and all subsequent games will be released through digital versions. This will also become mainstream here at Nintendo.
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