Nintendo Raises Switch 2 Prices as AI Chip Boom Drives Costs Higher, Profit Forecast Falls

Nintendo announced on Friday that it will increase prices for its highly anticipated Nintendo Switch 2 gaming console in multiple regions as soaring memory chip costs and supply chain disruptions continue to pressure the global gaming industry.

The Japanese gaming giant also warned that its net profit is expected to decline by 27 per cent in the current fiscal year despite strong early sales of the new console.

Nintendo said the price of the Switch 2 in Japan will increase by 20pc from May 25, while customers in the United States will see an 11pc increase from September 1, bringing the console’s price to $499.99.

In Europe, the console price will rise by 6pc to 499.99 euros.

For the fiscal year ending next March, Nintendo forecast net profit of 310 billion yen ($1.98 billion), down sharply from the previous year, while annual sales are expected to decline by 11.4pc to 2.05 trillion yen.

The company also projected operating profit of 370 billion yen, significantly below market expectations.

Despite the weaker outlook, Nintendo reported strong results for the previous fiscal year, with net profit jumping 52pc to 424 billion yen and annual sales nearly doubling to 2.31 trillion yen.

“Nintendo Switch 2 got off to a good start following its launch in June and global sales continued to grow after that,” the company said in a statement.

Nintendo revealed it sold nearly 20 million units of the new console by March, driven by strong demand for major titles including Pokemon Pokopia, Mario Kart World and Donkey Kong Bananza.

Industry analysts say rising memory chip prices caused by the global artificial intelligence boom are heavily impacting electronics manufacturers, including gaming console makers and smartphone companies.

Ongoing disruptions linked to tensions in the Middle East have further worsened global supply chain challenges.

Meanwhile, Sony also reported weaker hardware sales for its PlayStation 5 console, revealing that it sold 16 million PS5 units during the last fiscal year compared to 18.5 million units a year earlier.

However, Sony projected a 13pc increase in profit for its gaming division, supported by high-margin software sales and the growing digital gaming ecosystem.

Analysts believe Sony could benefit significantly from the upcoming release of Grand Theft Auto VI, one of the most anticipated video games in the industry.

Gaming industry consultant Serkan Toto said the blockbuster title could dramatically boost PlayStation sales worldwide.

“If there is a game that can sell PlayStations by the millions, it is this one,” Toto said.

Market experts believe Sony is currently in a stronger position than Nintendo because the PS5 is already in a mature stage of its product cycle, allowing the company to rely more heavily on profitable software and subscription revenues.

Nintendo, however, faces additional pressure as Switch 2 buyers are considered highly price-sensitive, particularly amid global economic uncertainty and rising consumer costs.

Analysts also warned that Nintendo will need to strengthen its upcoming software lineup to maintain momentum for the Switch 2 over the coming year.