Nintendo Navigates Rising Memory Costs and Switch 2 Profitability

Nintendo is actively working to secure stable supplies of memory components amid rising prices that have exceeded expectations. In a recent earnings call, Nintendo president Shuntaro Furukawa indicated that while the price increases have not yet significantly impacted hardware profitability for the third quarter of 2026, the company remains cautious about potential future price hikes. Furukawa stated, "If the rise in memory prices continues for longer than expected, it may start to have an effect on hardware profitability."

Memory price rises have not impacted the Switch 2 yet, says Nintendo president, but warns about pressure "through the next fiscal year"Nintendo aims to offset skyrocketing memory prices through "mass production of Nintendo Switch 2," because if more people own the console, it can "greatly expand software sales" insteadNintendo working to "secure stable supplies of memory components" to avoid hardware price risesNo Switch 2 price hike on immediate horizon, RAM shortage didn't impact Nintendo Q3 profitsNintendo may be willing to make less Switch 2 profit in order to grow unit sales

Interestingly, the strong sales of the Nintendo Switch 2 in Japan, attributed to popular titles like *Pokémon Legends: Z-A* and *Kirby Air Riders*, have paradoxically hurt profitability. Furukawa explained that the parts for the Switch 2 are purchased in U.S. dollars, and the depreciation of the Japanese Yen means that increased sales do not translate into higher profits. He noted, "Given the current exchange rate environment, the better-than-projected hardware sales in Japan will have a downward effect on gross profit and operating profit."

Nintendo Switch 2 Sales in Japan are “Better-Than-Projected,” and It’s Hurting the Switch 2’s ProfitabilityNintendo working to "secure stable supplies of memory components" to avoid hardware price risesNintendo may be willing to make less Switch 2 profit in order to grow unit salesNintendo aims to offset skyrocketing memory prices through "mass production of Nintendo Switch 2," because if more people own the console, it can "greatly expand software sales" insteadMemory price rises have not impacted the Switch 2 yet, says Nintendo president, but warns about pressure "through the next fiscal year"

In light of rising component costs, Nintendo is prioritizing the growth of the Switch 2's installed base over immediate hardware profitability. Furukawa emphasized the importance of maintaining stable consumer pricing while exploring long-term cost reductions. He remarked, "We want to continue to reduce costs as much as possible through mass production of Nintendo Switch 2 hardware." This strategy reflects a shift from the company's previous focus on hardware profitability, particularly following the underperformance of the Wii U.

Nintendo may be willing to make less Switch 2 profit in order to grow unit salesNintendo aims to offset skyrocketing memory prices through "mass production of Nintendo Switch 2," because if more people own the console, it can "greatly expand software sales" insteadMemory price rises have not impacted the Switch 2 yet, says Nintendo president, but warns about pressure "through the next fiscal year"Nintendo working to "secure stable supplies of memory components" to avoid hardware price risesNintendo Switch 2 Sales in Japan are “Better-Than-Projected,” and It’s Hurting the Switch 2’s Profitability

Furukawa confirmed that there are currently no plans to raise prices for the Switch 2 despite a 40% increase in component costs due to global shortages. He stated, "We do not expect any significant impact in the fourth quarter," but acknowledged that prolonged cost pressures could lead to price adjustments in the future. The company aims to avoid selling hardware at a loss, focusing instead on global profitability.

Memory price rises have not impacted the Switch 2 yet, says Nintendo president, but warns about pressure "through the next fiscal year"

Despite Nintendo's optimistic outlook, some analysts express concern about the sustainability of this strategy. Critics argue that the ongoing memory shortages and currency fluctuations could force the company to reconsider its pricing strategy sooner than anticipated. The potential for a price hike in 2026 remains a topic of speculation among industry observers.

No Switch 2 price hike on immediate horizon, RAM shortage didn't impact Nintendo Q3 profits

As Nintendo navigates these challenges, the company plans to monitor market trends closely and adapt its strategies accordingly. The next few years are critical for the Switch 2, and Furukawa has indicated that expanding the installed base will be a key focus, potentially leading to increased software sales that could offset hardware production costs.

Nintendo may be willing to make less Switch 2 profit in order to grow unit sales

• "If the rise in memory prices continues for longer than expected, it may start to have an effect on hardware profitability." — Shuntaro Furukawa, President of Nintendo

Memory price rises have not impacted the Switch 2 yet, says Nintendo president, but warns about pressure "through the next fiscal year"

• "Given the current exchange rate environment, the better-than-projected hardware sales in Japan will have a downward effect on gross profit and operating profit." — Shuntaro Furukawa, President of Nintendo

Nintendo Switch 2 Sales in Japan are “Better-Than-Projected,” and It’s Hurting the Switch 2’s Profitability

• "We want to continue to reduce costs as much as possible through mass production of Nintendo Switch 2 hardware." — Shuntaro Furukawa, President of Nintendo

Nintendo Switch 2 Sales in Japan are “Better-Than-Projected,” and It’s Hurting the Switch 2’s Profitability

• "We do not expect any significant impact in the fourth quarter." — Shuntaro Furukawa, President of Nintendo

Nintendo Switch 2 Sales in Japan are “Better-Than-Projected,” and It’s Hurting the Switch 2’s Profitability