Microsoft is reportedly losing hundreds of dollars on every Xbox Series X|S console it sells, and the reason comes down to rising hardware costs. According to a recent report by Windows Central’s Jez Corden, Microsoft did not secure enough hardware memory at fixed prices. This left the company exposed when the AI-driven global chip and supply chain crisis pushed prices much higher.
Wholesale memory prices have reportedly jumped by 700% since the Xbox Series X|S hardware was costed out. At the same time, overall component costs are said to have risen by around 50%, removing the cost savings that console makers usually expect over time.
Jez Corden said, “Xbox struggled to secure anywhere near enough memory with fixed prices necessary to keep its hardware margins healthy. I’m told Xbox is losing not dozens, but more in the hundreds of dollars per Xbox Series X|S console sold right now, with Asha Sharma noting that wholesale memory prices have risen 700% since the Xbox Series X|S was costed out.”
While other companies are also facing supply shortages, Microsoft reportedly had trouble securing long-term deals with fixed prices for key components. As a result, the company is now paying higher market prices. This creates another problem. If Microsoft cannot produce enough Xbox consoles, it has fewer opportunities to bring new players into the Xbox ecosystem and Game Pass. That is important because Game Pass helps fund many Xbox projects. However, the service is no longer generating as much revenue as it did in the past, which puts additional pressure on the teams that rely on that support.
Speaking of Game Pass, the subscription service recently received a price cut, but it came at a cost, as future Call of Duty titles will no longer launch on the service on day one. In addition, it was also revealed that Game Pass lost “millions of subscribers” after Microsoft increased its price in 2025.
