Microsoft Reportedly Shifting Xbox Production Out of China Ahead of Next-Gen

Microsoft is preparing to move a significant portion of its Xbox console production out of China starting in 2026, according to a report from Nikkei Asia.

As tariffs drive up costs, Microsoft prepares to relocate Xbox manufacturing out of China, with new hardware already in development.

While some parts of the manufacturing process may remain in the region, the company is said to be working toward relocating most of its hardware assembly and component sourcing elsewhere.

This move comes at a time when Xbox hardware has already seen multiple price hikes. In May and again in October, Microsoft raised the MSRP of its consoles to offset international tariffs. The Xbox Series X, which originally launched at $499, now retails for around $650 — a more than 30% increase since release. Both times, Microsoft cited "changes in the macroeconomic environment" as the reason for a hike.

Sources cited by Nikkei suggest the relocation plan isn’t limited to Xbox. It reportedly covers a wide range of Microsoft products, including notebooks and server hardware, with the goal of having new devices manufactured entirely outside of China by 2026.

At the same time, Microsoft is laying the groundwork for its next generation of gaming hardware. Xbox president Sarah Bond recently confirmed that new devices are in the "prototyping and design phases." Reports indicate a potential launch around 2027, aligning with Sony's anticipated PlayStation 6 timeline.