Macronix, the manufacturer Nintendo relies on to make Switch 1 cartridges, is phasing out production of the chips that power those games. That certainly sounds like another blow to physical media, and it may well be, but as it stands this news is unlikely to affect cartridges for Switch 2.
Macronix reports record profits in its latest quarterly financial period, and according to chairman Miin Wu, it does not expect to be able to expand its manufacturing capacity in order to fuel further growth. "Instead, near-term growth will be driven primarily by price increases," Wu says, as reported by Taipei Times.
Switch cartridges are powered by flash memory, which is the same type of tech that AI data centers are now eagerly gobbling at massively inflated prices. Chip manufacturers have found that they can make a lot more money selling their goods to data centers rather than makers of consumer electronics, leading to the global memory shortages that have presented us with the threat of next-gen consoles costing $1,000 or more.
Wu notes that demand for the chips "used in data centers is very robust," which is why it's emphasizing those while phasing out production of ROM chips, which are the ones that power Switch game cartridges.
However, Macronix does not manufacture Switch 2 cartridges – at least as far as we know. Details on Nintendo's manufacturing partners are poorly reported, but teardowns suggest that Switch 2 cartridges are primarily made by a separate company called Rohm, as well as another, unidentified manufacturer.
As noted by Nintendo Patents Watch, Macronix had apparently been trying to enter the Switch 2 cartridge business, but has seemingly never completed the R&D work necessary to get the ball rolling. If Macronix had entered the space, it might've opened the door to cheaper or higher-capacity physical Switch 2 games, which may have swayed some publishers away from game-key cards.
But that's pure speculation. As it stands, Macronix's exit from the ROM business won't affect the Switch 2 cartridge market. The effect on Switch 1 games is more difficult to measure, since that market is shrinking anyway – Nintendo itself has no more Switch 1 games on the horizon, though boutique publishers continue to put out physical games for the system.
Nintendo has recently reiterated that it has "no plans to ditch physical games," and it doesn't seem there's any reason to expect that to change with Macronix's pivot.
