Gaming
The Memory Boom Reached the Cartridge While the Biggest Engine Bet Everything on AI
Gaming's future got decided in two places this week, a chip factory and an engine keynote, and both decisions point the same way. The memory boom is rationing the chips inside physical game cartridges, while the biggest engine in the business is rebuilding itself around AI and asking developers to leave decades of familiar workflows behind. Nintendo reported the squeeze in its own earnings, and Epic Games said the quiet part out loud on a Tokyo stage.
Tim Sweeney took the stage at Unreal Fest Tokyo to defend Unreal Engine 6, the next version of the engine, due for launch in 2027. Epic plans to remove Blueprints, the visual scripting system developers have used for multiple decades, and replace those workflows with AI assistants, promising AI assisted migration for the teams that must move. Sweeney told developers that productivity could rise to four times the level of development done with the current workflows, and that the adoption of AI tools is rising in places like China and South Korea, with a significant gap growing between teams that adopt them and teams that stay with the old ways. Hours later he clarified on X that the translation from Japanese had added its own flavor, and restated the point in plainer terms, AI is happening, AI is here to stay, and Epic is going all in to bring the gains to every game developer.
The debate is live because the stakes are real. Recent years have seen more Japanese developers move from internal engines to Unreal, including Square Enix and Atlus, so a change to the engine is a change to how a large share of the industry builds games. Developers have questioned the removal of long standing workflows, and Epic doubled down anyway, betting that AI assistance is worth the learning curve. The engine that powers so much of modern gaming is now a referendum on AI in game development, and the vote is happening in public.
The chip story hit closer to the shelf. Macronix, the Taiwanese chipmaker that supplies much of the ROM inside Nintendo Switch cartridges, is winding down that business to make more flash memory instead. ROM sales fell 39 percent over the past year and now make up 5 percent of its business, down from 26 percent a year earlier, while the company booked about 338 million dollars in net profit last quarter on a 70.5 percent gross margin. Chairman Miin Wu told investors that data center customers are chasing the company for more capacity, and its planned 1.2 billion dollars in new spending goes to NOR and NAND flash instead. Micron made a similar call late last year when it closed its Crucial consumer brand to free up supply for AI customers.
Nintendo has cover for now, since ROHM group companies also make ROM for its game cards, and analysts expect the move to nudge more games toward digital, including Game Key Cards that hold only a download license rather than the game itself. Downloads already account for around 60 percent of Nintendo software sales, and a Nintendo executive said last month that physical games stay on Switch 2.
The memory crunch showed up in Nintendo earnings the same day. Switch 2 sold 2.67 million consoles in the July to September quarter, down 41 percent from a year earlier, after the company raised the console price in the United States, Canada, and Japan as memory costs climbed. Lifetime Switch 2 sales reached 26.35 million units, software sales rose 18.8 percent in the half, and operating profit jumped 49.1 percent to 216.5 billion yen, helped by software taking a larger share of sales and a refund of United States tariffs. Nintendo kept its full year forecast at 16.5 million Switch 2 units, with Mario Kart World leading software at 16.48 million copies, and shares rose 6.3 percent in Tokyo on the results.
For readers, the week ties together in one thread. The chips that run games and the engines that build them are both being reshaped by the AI boom, and the players who benefit most are the ones who watch the supply chain as closely as the release calendar. Physical games are holding their ground for now, the engine wars are moving toward AI assistance as the default, and the console that defined the last decade is selling on software strength while hardware cools. Keep an eye on the cartridge supply, the Unreal Engine 6 migration tools, and the holiday numbers, since the next few months will show how much of this shift is real and how much is just the loudest week of the year.
Quick answers
What is this story about?
Gaming's future got decided in two places this week, a chip factory and an engine keynote, and both decisions point the same way. The memory boom is rationing the chips inside physical game cartridges, while the biggest engine in the business is rebuilding itself around AI and asking developers to leave decades of familiar workflows behind. Nintendo reported the squeeze in its own earnings, and Epic Games said the quiet part out loud on a Tokyo stage.
Why does this story matter?
For readers, the week ties together in one thread. The chips that run games and the engines that build them are both being reshaped by the AI boom, and the players who benefit most are the ones who watch the supply chain as closely as the release calendar. Physical games are holding their ground for now, the engine wars are moving toward AI assistance as the default, and the console that defined the last decade is selling on software strength while hardware cools. Keep an eye on the cartridge supply, the Unreal Engine 6 migration tools, and the holiday numbers, since the next few months will show how much of this shift is real and how much is just the loudest week of the year.
Sources
- Kotaku, Epic Games Tim Sweeney insists AI adoption unlikely to be reversed as company crams AI into Unreal Engine 6
- TechSpot, The AI boom is coming for Switch cartridges as a key chip supplier quits making ROM
- GameReactor, Nintendo earnings, Switch 2 passes 26 million as launch surge cools
- MLQ, Nintendo Switch 2 sales fell 41 percent in the latest quarter but full year forecast holds
New to crypto? Read the crypto glossary, browse frequent questions, read our story, or explore the story archive.