Microsoft has announced a global increase in the prices of its Xbox gaming consoles, citing soaring component costs driven by growing demand for artificial intelligence (AI) technologies.
The company said the new pricing will take effect from August 1, with Xbox console prices increasing by between $100 and $150 across global markets.
In the United States, the entry-level Xbox Series S will retail for $500, while the flagship Xbox Series X will cost up to $800. Microsoft has yet to announce revised prices for European markets, where the Series X currently sells for about 600 euros.
The company also confirmed that it will discontinue the 2TB Xbox Series X model.
The latest adjustment marks Microsoft’s third Xbox price increase in recent years, following a global price hike in May 2025 and another increase limited to the U.S. market in October 2025.
Microsoft attributed the move to a sharp rise in the cost of memory and storage chips, fueled by the rapid expansion of AI infrastructure worldwide. The accelerated construction of data centres for AI training and deployment has significantly increased demand for semiconductor components used in consumer electronics.
According to the company, the prices of memory and storage chips have more than doubled in recent months and are expected to double again by late 2027 due to persistent supply shortages.
The global semiconductor market is dominated by manufacturers including Samsung, SK Hynix, and Micron, all of which have been grappling with increased demand from the AI industry.
Microsoft noted that gaming consoles are typically sold at little or no profit, with manufacturers often subsidising hardware costs while generating revenue through software, subscriptions, and digital services.
The price increase reflects a broader trend across the gaming and technology sectors. Earlier this year, Sony raised the price of its PlayStation 5 by 100 euros in Europe, bringing the standard model to 650 euros. Nintendo has also announced a price increase of more than six percent for its Switch 2, effective September 1.
Meanwhile, gaming company Valve recently launched its new Steam Machine at a starting price of more than $1,000, exceeding market expectations.
Despite the hardware price hikes, Microsoft reduced the cost of its Xbox Game Pass subscription in April after gamers criticised the service as being too expensive.
Microsoft’s gaming division, which contributed approximately 8 percent of the company’s revenue during the 2025 fiscal year, underwent a major restructuring earlier this year amid declining Xbox hardware sales and weaker-than-expected performance of several new game releases.
