Microsoft is raising the prices of its Xbox gaming consoles by up to $150 worldwide, as artificial intelligence-driven demand for memory chips begins to push up costs across the consumer electronics industry.

The revised prices will take effect on August 1. Xbox consoles with 512 GB of storage will be $100 more expensive, while 1 TB variants will be $150 more expensive. Microsoft will also discontinue the 2 TB version of the console.

The latest increase comes after Xbox raised console prices twice last year amid pressure from tariffs, weak consumer spending and intense competition in the gaming market.

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This time, however, Microsoft is pointing to a widening shortage of components used in storage and memory systems.

“Unfortunately, console storage and memory prices have increased by more than 2.5 times and we expect another doubling by the fall of 2027,” Xbox said.

The company added that the hardware supply chain crisis had hit the gaming industry particularly hard.

The rapid expansion of artificial intelligence infrastructure has led technology companies to invest heavily in data centres packed with advanced processors, storage equipment and memory chips.

Chipmakers have consequently been prioritising products used in AI systems, tightening the supply of components required for consumer devices such as gaming consoles, laptops and tablets.

Industry groups representing automakers, retailers and electronics manufacturers have warned that growing demand for memory chips could result in sharp increases in the prices of consumer goods in the United States and create further supply-chain disruptions.

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The impact is already spreading beyond gaming hardware.

Apple on Thursday raised prices of its iPads and MacBooks, saying it could no longer protect customers from the surge in memory and storage costs caused by the AI industry’s data-centre expansion.

Microsoft is not the only gaming company passing higher costs on to consumers.

Sony increased the prices of its PlayStation 5 consoles in April, following another price revision in August last year. The increases underline the pressure facing console makers, which typically sell hardware on thin margins to build a larger base of users for games and subscription services.

The latest Xbox price hike also comes as Microsoft reviews spending across its gaming division. Xbox is planning significant job cuts next month, along with reductions in marketing and other budgets, Bloomberg News reported earlier this month.

Higher hardware prices could make it harder for Microsoft to expand Xbox console sales, particularly as gamers weigh the cost of upgrading against alternatives such as personal computers, cloud gaming and older-generation devices.