The escalating trade tensions between the United States and other major global economies are creating substantial pressure on the production costs of various electronics, notably gaming consoles like the PlayStation 5 and Xbox Series X|S, which are predominantly assembled in China. With the looming threat of significant price hikes for essential components such as RAM possibly leading to further increases in console prices, Microsoft is proactively addressing this issue by broadening its production horizon to Vietnam.
Expansion of Xbox Production in Vietnam
New developments indicate a strategic shift in Xbox manufacturing. Reports suggest that Foxconn subsidiary Fushan Technology aims to enhance its production capabilities in Vietnam, seeking permission to fabricate up to 4.8 million Xbox gaming units annually. This expansion is expected to encompass not only the consoles themselves but also essential accessories like controllers and headsets, all susceptible to the same price pressures.
China’s Luxshare-ICT Joins the Effort
Microsoft isn’t alone in this endeavor. A related document reveals that China’s Luxshare-ICT intends to manufacture up to 4.5 million game consoles per year at a Vietnamese facility beginning in 2026. While the specific brands of these devices have not been disclosed, it suggests a widespread industry response to the global trade challenges that have caused a notable increase in gaming system prices long after their initial launch.
Mitigating Price Hikes and Looking Forward
Due to persistent trade tensions and a surging demand for AI data centers, manufacturers are keen to minimize price increments for gaming devices wherever possible. For Microsoft and others, expanding production beyond China is a strategic measure to prevent gaming systems from becoming prohibitively expensive, thereby safeguarding the cost advantage that consoles typically hold over gaming PCs, including upcoming contenders like the Steam Machine.
Amidst global trade challenges, Microsoft is expanding Xbox production to Vietnam to combat potential price increases.