Memory price surge impacts Nintendo: Switch 2 price in the US rises by $50, sales forecast lowered

The abnormal surge in memory chip prices is reshaping the cost logic of the gaming hardware market. Nintendo has announced an increase in the price of Switch 2 in the United States and several major markets, while also lowering its sales and profit forecast for this fiscal year. A supply chain shock originating from the expansion of AI data centers is profoundly affecting the business trajectory of this Japanese gaming giant.

On Friday, Nintendo announced that the retail price of Switch 2 in the US will be raised from $449.99 to $499.99 starting September 1, an increase of $50. The price in the Japanese market will be adjusted first, on May 25, rising from 49,980 yen to 59,980 yen. The Canadian and European markets will also follow suit with price hikes. Nintendo attributed this price adjustment to “changes in the market environment” and a comprehensive consideration of “global business prospects.”

At the same time, Nintendo's fiscal year performance outlook was significantly below analysts’ expectations, putting pressure on the market. The company expects Switch 2 sales for the fiscal year ending March 2027 to fall to 16.5 million units, down from 19.86 million units in the just-ended previous fiscal year. Net sales are forecast at 2.05 trillion yen, an 11.4% year-on-year decline and far below the 2.46 trillion yen expected by LSEG analysts; net profit is expected to fall 27% to 310 billion yen, also well below the market expectation of 418.5 billion yen.

The core driver of this price increase is the strong demand for memory chips caused by the global wave of AI data center construction, resulting in an unprecedented surge in memory component prices used in Switch 2. Nintendo pointed out in its fiscal year outlook that it will face around 100 billion yen (approximately $637.8 million) in cost impacts this fiscal year, mainly due to the price increases of memory and other core components, as well as “tariff measures.”

Nintendo is not alone. Previously, Sony announced in March this year that it would increase the price of its flagship product PlayStation 5 by up to $150. Facing similar supply chain pressures, both gaming console giants have passed the increased costs on to end consumers.

All financial forecasts for this fiscal year failed to meet analysts’ expectations. In terms of sales volume, gaming consoles have typically seen an increase in unit sales in the year following their release, but Nintendo’s forecast this time goes against the norm, predicting a decline compared to the previous fiscal year.

Serkan Toto, CEO of Kantan Games, commented, “Nintendo has been under pressure for months, but this impact is quite severe—traditionally, console sales in the second year should rise, not decline as Nintendo predicts this time.”

Nintendo’s first quarter revenue was 407.2 billion yen, lower than the 430.6 billion yen forecast by LSEG analysts; however, net profit was 65.2 billion yen, slightly beating the market expectation of 63.28 billion yen.

Nintendo’s share price has remained under pressure since reaching a historic high above 14,000 yen last August, with a cumulative decline of nearly 50% from its peak so far. Rising memory costs are seen as a key driver of this decline. The lower-than-expected full-year guidance released on Friday further heightened market concerns about the company’s near-term profitability.

Despite significant pressure at the hardware level, Nintendo’s strong IPs continue to provide some revenue support. The “Super Mario Galaxy Movie,” co-produced with Universal Pictures and Illumination, has already grossed nearly $900 million worldwide this year (according to Box Office Mojo). “Pokemon Pokopia” on the Switch 2 platform has become a surprise hit with positive user reviews, making it one of the best-selling games on the console so far.

Nintendo also plans to launch new entries in the “Splatoon” and “Star Fox” series this year, with two heavyweight Pokemon titles set for release next year.

Serkan Toto believes, “For Nintendo, the most crucial step now is to launch blockbuster first-party games as quickly as possible in order to drive console sales.” How to mitigate the demand pressure following hardware price increases by strengthening the software lineup will be the core test Nintendo faces this fiscal year.