Nintendo raises Switch 2 prices amid memory shortage, predicts sales decline

Nintendo is set to increase the price of the Switch 2, following predictions of decreased sales for its leading console amidst a memory chip shortage affecting the Japanese tech giant.

According to the company's statement on Friday, it anticipates selling 16.5 million Switch 2 units during its financial year ending March 31, 2027, a drop from the 19.86 million sold in the recently concluded fiscal year.

Moreover, the company's current year forecasts were notably lower than analysts had predicted.

In the United States, Nintendo plans to raise the Switch 2 price by $50, adjusting from $449.99 to $499.99, effective September 1. 

In Japan, the price will rise from JPY 49,980 to JPY 59,980, starting May 25. Price hikes will also affect Canada and Europe.

Nintendo attributed the price increase to "changes in market conditions" following an evaluation of "the global business climate."

The Switch 2 consoles require memory chips, which have experienced unprecedented cost surges due to worldwide AI data center expansion. Consequently, Nintendo follows suit after rival Sony revealed up to a $150 increase in the price of its PlayStation 5 in March.

Since reaching a record high above JPY 14,000 in August, Nintendo shares have faced pressure, experiencing a nearly 50% decline as the memory shortage affects the company.

On Friday, Nintendo disclosed that its fiscal forecast for the year concluding in March 2027 indicates an estimated JPY 100 billion ($637.8 million) impact from rising component costs, particularly for memory, and "tariff measures."

The company's projections fell short of analyst anticipations. Now, Nintendo foresees net sales of JPY 2.05 trillion for the year, reflecting an 11.4% decline from the previous year and falling below LSEG analyst predictions of JPY 2.46 trillion.

Additionally, the company expects a 27% drop in net profit to JPY 310 billion, which is under analyst forecasts of 418.5 billion yen.

"Nintendo has been under pressure for some time," mentioned Serkan Toto, CEO of Kantan Games, to CNBC. "The impact is significant, as console sales generally increase in their second year—unlike the drop Nintendo anticipates."

Despite challenges, Nintendo remains successful with its iconic franchises. This year's "The Super Mario Galaxy Movie," released by Universal and Illumination, has amassed approximately $900 million worldwide, according to Box Office Mojo.

The game "Pokémon Pokopia," for the Switch 2 has emerged as a surprising success, earning favorable user reviews and becoming a top-seller for the console so far.