As the new generation console update cycle approaches, there is news that Microsoft will launch a production capacity transfer plan for Xbox consoles.

According to "Nikkei Asia" citing people familiar with the matter, Microsoft plans to move most of its product manufacturing capacity out of China by the end of 2026.It is reported that this new strategy will cover Xbox console hardware, but some parts production may still remain in China.

Before the news broke, Microsoft had raised the price of Xbox consoles twice during the year - adjusting the recommended retail price in May and this month (October).These price adjustments are aimed at responding to the tremendous market pressure on Microsoft.Previously, the company had been selling consoles with a loss-making strategy, exchanging hardware losses for ecological gains.Affected by this, the current retail price of the flagship product Xbox Series X has reached US$650, an increase of more than 30% from the release price.

Anonymous sources told Nikkei Asia: "The scope of the transfer is quite broad, covering parts, components and complete machine assembly for the introduction of new laptop and server products. Microsoft hopes that starting in 2026 at the earliest, these products will be fully manufactured outside China."

Microsoft is currently planning a new generation of gaming hardware product matrix, and building a more profitable and sustainable production supply chain is crucial to the Xbox business.

Xbox business president Sarah Bond recently reiterated that new Xbox hardware is currently in the prototyping and development stage.The new generation hardware product line will cover PCs, consoles, handheld consoles and cloud gaming devices, but specific details have not yet been determined.