The End of Moore’s Law and Gaming Hardware Price Cuts

For over four decades, video game consoles have followed a reliable trajectory: launch at a premium, then receive periodic price cuts coupled with slimmer redesigns, enabled by ever-advancing silicon manufacturing. From the Atari VCS in the 1970s to the PlayStation 4 and Xbox One in the 2010s, console makers capitalized on Moore’s Law—doubling transistor density roughly every two years—to deliver smaller, cooler, and less expensive hardware. Today, however, as process‐node progress slows and costs escalate, that predictable pattern is breaking down. Instead of seeing prices decline, we’re witnessing price hikes on current-generation systems, and the slim‐console renaissance appears on hold indefinitely.

The Last of the Easy Die Shrinks

Historically, a console’s second or third hardware revision would move from, say, a 90 nm CPU and GPU to 65 nm, then 45 nm, and so on. Each die shrink yields multiple benefits:

• Reduced power consumption: less current needed per transistor switch.
• Lower heat output: fewer thermal hotspots, smaller cooling assemblies.
• Higher wafer yield: more dies per silicon wafer, lowering per-unit cost.
• Physical consolidation: smaller enclosures, lighter power bricks.

Take Microsoft’s Xbox 360 as an example: its CPU/GPU/eDRAM implementation transitioned from four discrete chips on 90 nm in 2005 to a single unified 45 nm SoC by 2010. This shrink cut peak power draw from 203 W to 133 W and helped eliminate the fabled “Red Ring of Death.” The PS2 Slim’s 60 percent smaller logic die also fueled Sony’s ability to drop prices from $299 at launch all the way to $99 within a decade.

Slowing Node Transitions and Rising Costs

Fast‐forward to today’s consoles. PlayStation 5 and Xbox Series X|S launched on TSMC’s 7 nm process in late 2020. A single mid-cycle 6 nm revision appeared in late 2022—primarily for power efficiency rather than performance uplift—and no further substantial die shrinks are on the horizon. Why?

• Complexity of EUV multi-patterning: Advanced nodes beyond 5 nm rely heavily on Extreme Ultraviolet (EUV) lithography. Each additional mask or EUV pass multiplies cost per wafer.
• Yield challenges: N3 yields at TSMC and Intel’s 18A suffer from greater defect density, meaning fewer good chips per wafer and increased per-unit prices.
• R&D and capital expenditure: Building next-generation fabs now costs upwards of $20 billion. Only a handful of players—TSMC, Samsung, Intel—can shoulder that investment, and they pass costs onto customers.
• Physics limits: At sub-2 nm effective pitch, quantum tunneling and variability become existential barriers unless radical materials or transistor architectures emerge.

Challenges in Advanced Node Development

According to Pat Gelsinger, CEO of Intel, “We’re entering an era of innovation beyond planar transistors—Combining 3D stacking, gate-all-around (GAA) transistors, and chiplets to sustain performance scaling.” Yet industry watchers note that Intel’s 20A and 18A nodes have slipped several quarters, and TSMC’s N3 has faced yield setbacks. With wafer prices climbing from roughly $7,000 for 7 nm to over $20,000 for 3 nm, any console manufacturer hoping for a future 5 nm-to-3 nm die shrink must contend with wafer economics that quickly negate cost-saving benefits.

Emerging Alternatives: Chiplets and 3D Stacking

As monolithic node advances slow, the semiconductor ecosystem is pivoting to alternative scaling strategies:

• Chiplet integration: AMD’s Ryzen and EPYC CPUs use multiple 5 nm and 7 nm chiplets interconnected via Advanced Packaging. In gaming consoles, a chiplet approach could allow splitting CPU cores, GPU compute units, and specialized AI blocks across smaller dies, improving yield and flexibility.
• 3D IC stacking: Technologies like TSMC’s CoWoS or Intel’s Foveros stack memory dies over logic dies, reducing footprint and boosting bandwidth while managing power density.

However, these packaging methods add complexity and cost—routing, thermal management, and additional test requirements can outweigh the savings of a die shrink in many consumer-grade products.

Market and Supply Chain Dynamics

Beyond manufacturing, global factors influence console pricing:

• Inflation: Consumer price indices ran near 40-year highs in 2023–2024, pushing logistics, labor, and component costs upward.
• Geopolitical trade policies: US-China export controls on advanced semiconductors increase compliance overhead and redirect supply chains.
• Pandemic-era disruptions: Port bottlenecks and raw material shortages linger, keeping component lead times long and spot premiums high.
• Margin strategies: Historically, console makers accepted razor-thin or negative hardware margins to drive software and service sales. Recently, companies like Nintendo and Microsoft have signaled a shift toward healthier hardware gross margins.

The Switch 2 Example

In May 2025, Nintendo released the Switch 2 at a $449 starting price—$150 above the original Switch. Under the hood sits a custom “Mariko X2” SoC built on TSMC’s 5 nm node, featuring a quad-core Arm Cortex-A78 CPU at up to 3.2 GHz and an 8-CU RDNA2 GPU clocked at 2.2 GHz, alongside 8 GB LPDDR5 at 6,400 MT/s. While this 5 nm update improves battery life (by roughly 20 percent) and thermal headroom, the high N5 wafer cost and limited die count negate any potential price cut. Analysts at Jon Peddie Research note that “processing costs per transistor have plateaued; incremental process node savings no longer justify the scale for consumer handhelds.”

Outlook: Will Prices Ever Fall Again?

Experts remain divided. Jensen Huang, CEO of NVIDIA, argues that architectural innovations—like DPX, RT preemptive uses, and Transformer Engine cores—can deliver generational leaps without relying on die shrinks. Conversely, industry consultant Stacy Lundy notes that “without sub-6 nm transitions every few years, incumbents will struggle to pass on savings to consumers.”

Some potential inflection points:

• Mass adoption of second-generation EUV and High-NA EUV, lowering mask counts.
• A successful shift to silicon-germanium or carbon nanotube transistors unlocking a new performance era.
• Trade agreements restoring competitive wafer supply and easing export controls.

Until then, console buyers should be prepared to pay full price or more—and expect fewer “Slim” versions and permanent discounts. As the semiconductor industry approaches the physical limits of silicon, video game consoles may no longer be the ever-cheaper second-hand gateways they once were.