Amid escalating trade tensions impacting global markets, the gaming industry faces significant production challenges. Gaming consoles like the PlayStation 5 and Xbox Series X|S, predominantly assembled in China, are no exception. As component prices, such as RAM, continue to rise, there’s a looming threat of increased console costs. To counteract this, Microsoft is strategically moving to expand its production capabilities in Vietnam.
Microsoft’s Strategic Move to Vietnam
Regulatory documents reveal that Foxconn subsidiary Fushan Technology is seeking approval to significantly bolster production in Vietnam to manufacture up to 4.8 million Xbox units annually. This expansion likely includes a wide range of Xbox products, from consoles to accessories like controllers and headsets, all facing similar price pressures.
More Manufacturers Eyeing Vietnam
Microsoft isn’t alone in this shift. Reports suggest that China’s Luxshare-ICT is poised to produce up to 4.5 million game consoles per year in Vietnam, starting in 2026. While the specific brands have not been disclosed, it’s evident that major manufacturers are diversifying production locations in response to global trade challenges and pricing concerns.
Looking Ahead to a New Console Generation
As trade tensions show no sign of abating and AI data centers drive component demand, expanding production outside China emerges as a prudent strategy for all console makers. This expansion could help keep console prices competitive, maintaining their edge over gaming PCs in terms of affordability, particularly as the next console generation approaches.
With the potential for the next-gen systems to become costly, staying competitive in pricing ensures gaming consoles remain an attractive choice against alternatives like the upcoming Steam Machine.