Nintendo announced a significant price increase for its upcoming Switch 2 console, citing a global memory chip crunch that has impacted production costs and supply chains. The company revealed that the retail price of the Switch 2 in the U.S. will rise by $50, from $449.99 to $499.99, effective September 1. In Japan, the price will increase from 49,980 yen to 59,980 yen starting May 25, with similar hikes planned for Canada and Europe [1].
Nintendo forecasted sales of 16.5 million Switch 2 units for the fiscal year ending March 31, 2027, a decline from the 19.86 million units sold in the previous fiscal year. The company's sales forecasts for the current year were described as 'far below analyst estimates' [1]. The price hikes and lower sales outlook are attributed to unprecedented increases in memory chip prices, driven by the global AI data center buildout. Nintendo stated that the decision to raise prices was made 'in light of changes in market conditions' and after considering 'the global business outlook' [1].
The company also noted that its financial forecast for the year ending March 2027 reflects an approximately 100 billion yen impact due to rising component prices, particularly for memory, as well as 'tariff measures.' Nintendo's shares have been under pressure, falling nearly 50% since reaching a record high above 14,000 yen in August, as the memory crunch has weighed on the company's performance [1].
Nintendo's move follows a similar price increase by rival Sony, which raised PlayStation 5 prices by up to $150 in March [1].
CONCLUSION
Nintendo's decision to raise Switch 2 prices and its forecast for declining console sales highlight the significant impact of the global memory chip shortage on the gaming industry. With shares under pressure and forecasts below analyst expectations, the market is reacting negatively to the company's outlook and cost challenges.