Nintendo Co. Is raising the retail price of its Switch 2 console, a move that signals the growing impact of a global memory chip shortage driven by the artificial intelligence boom. The Japanese gaming giant announced the price hikes on Friday, alongside a sobering sales forecast that suggests the flagship console’s momentum may be slowing sooner than analysts expected.
The price adjustments will hit consumers in several major markets. In the United States, the Switch 2 will rise by $50, moving from $449.99 to $499.99 effective September 1. The impact is more pronounced in Nintendo’s home market, where the price in Japan will jump from 49,980 yen to 59,980 yen starting May 25. The company confirmed that similar increases will be implemented across Canada and Europe.
In a statement, Nintendo attributed the decision to “changes in market conditions” and a broader evaluation of the “global business outlook.” However, the underlying cause is a systemic struggle for hardware components. The Switch 2 relies on memory chips that have seen unprecedented price spikes as manufacturers pivot production to satisfy the insatiable demand for AI data centers.
Nintendo is not alone in this struggle. The move follows a similar trajectory by Sony, which announced price increases of up to $150 for its PlayStation 5 in March, illustrating a broader trend where hardware manufacturers are passing the cost of high-end silicon directly to the consumer.
The AI Squeeze and the Memory Crunch
The intersection of gaming and AI has created an unexpected bottleneck. As tech giants race to build out the infrastructure for large language models and generative AI, the supply of high-bandwidth memory chips has tightened, driving up costs for any device requiring significant processing power.
For Nintendo, the financial toll is already visible. The company reported that its financial forecast for the fiscal year ending March 2027 reflects a roughly 100 billion yen ($637.8 million) negative impact stemming from rising component costs and “tariff measures.” This pressure has rattled investors. Nintendo shares have fallen nearly 50% from a record high of over 14,000 yen reached in August.
The financial outlook for the coming year remains grim compared to Wall Street’s expectations. Nintendo now forecasts net sales of 2.05 trillion yen—an 11.4% year-on-year decline—missing the 2.46 trillion yen predicted by LSEG analysts. Net profit is expected to slide 27% to 310 billion yen, well below the analyst target of 418.5 billion yen.
A Rare Decline in the Second-Year Cycle
Perhaps more concerning to industry watchers than the price hike is Nintendo’s projection for unit sales. The company expects to sell 16.5 million Switch 2 units in the fiscal year ending March 31, 2027. This represents a decline from the 19.86 million units sold in the previous fiscal year.
Typically, gaming consoles experience a “second-year surge” as software libraries expand and late adopters enter the market. A projected decline this early in the console’s lifecycle is an anomaly that has raised red flags for experts.
“The clock was ticking for Nintendo for months now,” Serkan Toto, CEO of Kantan Games, told CNBC. “The impact is quite dramatic, as console sales usually go up in the second year — and not down as Nintendo predicts this time.”
| Market | Previous Price | New Price | Effective Date |
|---|---|---|---|
| United States | $449.99 | $499.99 | Sept. 1 |
| Japan | 49,980 yen | 59,980 yen | May 25 |
Software and Cinema as a Financial Buffer
While hardware margins are being squeezed, Nintendo’s intellectual property continues to perform as a powerful hedge. The company has successfully diversified its revenue streams, leaning heavily into entertainment and first-party software to offset hardware losses.
The “Super Mario Galaxy Movie,” a collaboration between Universal and Illumination, has grossed nearly $900 million globally, according to Box Office Mojo. On the console side, the surprise hit “Pokémon Pokopia” has become one of the Switch 2’s best-selling titles, maintaining high user ratings and driving software attachment rates.
To combat the projected sales slump, Nintendo is leaning into its most aggressive release schedule in years. A new entry in the “Splatoon” franchise and a “Starfox” title are slated for release later this year, with two major Pokémon titles scheduled for next year.
According to Toto, the company’s survival in this high-cost environment depends entirely on its ability to deliver “blockbuster first-party games as fast as possible in order to drive sales.”
For the first quarter, Nintendo reported revenue of 407.2 billion yen, slightly missing LSEG estimates of 430.6 billion yen. However, net profit came in at 65.2 billion yen, marginally beating expectations of 63.28 billion yen, suggesting that while top-line growth is slowing, the company is still finding ways to maintain profitability.
Disclaimer: This report contains financial forecasts and market data. This information is for informational purposes only and does not constitute investment advice.
Nintendo is expected to provide further clarity on its hardware supply chain and updated shipment targets during its next quarterly earnings call. The company has not yet specified if further price adjustments will occur in other international territories.
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