Microsoft Gradually Moves Xbox Production Out of China — Why It Matters

Microsoft is shifting production of its Xbox consoles away from China to reduce costs and mitigate the impact of international tariffs.

Sources at Nikkei Asia report that the bulk of components, assembly, and manufacturing for the new hardware will be relocated abroad by 2026, although some production processes may still remain in China.

The change comes after two Xbox price increases earlier this year — in May and October. The measures are intended to offset tariff-related costs: Microsoft has been selling consoles at razor-thin margins, and in some instances at a loss. As a result, the Xbox Series X price has risen to $650, roughly 30% above its original launch price.

According to insiders, the company’s plan covers parts and components as well as the assembly of new devices — including laptops, servers, and gaming consoles. Microsoft expects manufacturing to be fully moved out of China by 2026.

The goal is to make production more profitable and resilient, a step the company views as vital to Xbox’s future.

Source: iXBT.games