Nintendo President Furukawa Addresses Switch 2 Pricing Strategy Amid Memory Price Surge and Tariff Pressures
Inside Nintendo's Component Procurement Strategy Revealed in Kyoto Shimbun Interview
Nintendo President Shuntaro Furukawa has spoken about the company's response to soaring global memory prices and the pricing strategy for the Nintendo Switch 2 in an exclusive interview with Kyoto Shimbun. As AI data center expansion creates unprecedented pressure on memory supply, the entire gaming industry faces rising component costs. Furukawa revealed that Nintendo has been procuring components based on medium-to-long-term business plans, denying any immediate impact on profitability while emphasizing the need to closely monitor market conditions going forward.
The Memory Price Crisis and Its Impact on Gaming
The rapid growth of the AI industry has triggered an explosive increase in demand for memory used in data centers. This surge has significantly driven up prices for DRAM and other semiconductor memory products. The PC gaming market has already seen these costs passed on to consumers through higher-priced gaming computers.
According to reports from Nikkei, the price of memory used in the Switch 2 has risen by approximately 40%, raising concerns about pressure on Nintendo's profit margins and contributing to a decline in the company's stock price. Industry analysts suggest the memory shortage could persist until 2028, presenting a long-term challenge for console manufacturers.
Furukawa's Medium-to-Long-Term Procurement Approach
When asked about the Switch 2's lower profit margin compared to the original Switch, Furukawa explained that hardware profitability depends on multiple factors including component procurement conditions, cost reductions through mass production, and the impact of exchange rates and tariffs.
Regarding memory price increases, he stated that Nintendo procures components from suppliers based on medium-to-long-term business plans, noting there is no immediate impact on financial performance. However, he added that the current memory market is "very volatile" and requires close monitoring, signaling awareness of potential future risks.
When pressed about whether procurement conditions might lead to price increases, Furukawa declined to comment, calling it "hypothetical."
Tariff Costs and Pricing Policy
Alongside the memory issue, international tariffs represent another significant challenge for Nintendo's operations. Furukawa acknowledged that at the start of the fiscal year, Nintendo had projected a negative impact of several tens of billions of yen from tariffs, with corresponding effects materializing in the first half of the year.
On the company's approach to tariffs, Furukawa stated that while it's difficult to accurately gauge future impacts, Nintendo's basic policy is to recognize tariffs as costs and pass them on to prices as much as possible, not just in the United States. This statement, suggesting potential future price adjustments, received significant coverage in international gaming media.
At the same time, he emphasized that this is "a crucial period for our game business as we promote the adoption of new hardware and maintain the momentum of our platforms." The president indicated Nintendo would carefully balance cost pass-through with the need to drive console adoption.
Switch 2 Market Performance and Industry Response
The Switch 2 launched in June 2025 and achieved impressive early momentum, surpassing 5 million units sold within its first month. Priced at ¥49,980 (approximately $449.99 in the US), it represents Nintendo's most expensive gaming console to date.
However, reports indicate that holiday season sales fell below the original Switch's performance during the same period, suggesting the higher price point may be creating adoption barriers. In financial markets, concerns about memory cost pressures have contributed to approximately a 33% decline in Nintendo's stock price over the past five months.
Looking Ahead
Nintendo appears to have secured adequate component inventory for the near term, making immediate price changes unlikely. However, if memory price inflation continues long-term, the company may eventually need to respond with pricing adjustments.
In the same interview, Furukawa mentioned plans to strengthen the software lineup from 2026 onwards, revealing development of both popular franchise sequels and "completely new software." Nintendo's strategy clearly involves pursuing Switch 2 platform growth through both hardware pricing decisions and enhanced software appeal.
As the entire gaming industry faces rising cost pressures, all eyes are on how Nintendo will navigate these challenges. More detailed insights are expected when the company announces its third-quarter financial results on February 3rd.
In Japan, there's ongoing debate about console pricing and the impact of memory shortages. What discussions are happening in your country about gaming hardware prices? Have you noticed the effects of AI-driven memory price increases? We'd love to hear your thoughts in the comments.
References
- https://www.videogameschronicle.com/news/nintendo-is-monitoring-high-ram-prices-and-tariff-impacts-very-closely-president-shuntaro-furukawa-says/
- https://www.kyoto-np.co.jp/articles/print/1631945
- https://automaton-media.com/articles/newsjp/nintendo-20260113-405744/
- https://www.nikkei.com/article/DGXZQOUF10CPN0Q5A211C2000000/
- https://daily-gadget.net/game_gaming/105518/
Reactions in Japan
President Furukawa's comment about 'medium-to-long-term procurement' shows they're managing with foresight. It really reflects Nintendo's solid business approach.
A 40% increase in memory prices is a pretty serious figure. Didn't expect the AI demand to hurt the gaming industry like this. Worried it might last until 2028.
I thought Switch 2 at nearly ¥50,000 was expensive, but looking at the memory situation, it might be unavoidable. Actually impressive they managed this price.
I want to buy a console for my kids, but if prices go up more, it'll be tough. I hope Nintendo can hold the line.
Nintendo stock down 33% in 5 months... Tough if the memory issue isn't resolved. But might be a buying opportunity for long-term investors.
"Can't comment on hypotheticals" basically means they can't deny the possibility of price hikes. Honestly, it just makes me anxious.
PC parts have been getting expensive too, so it was predictable consoles would face the same situation. AI demand is scary.
The policy to 'pass tariff costs to prices as much as possible' is standard business practice. The fact they're conscious of the adoption phase shows good balance.
Back in the day, console prices used to go down over time. Now we're worried about price increases... Times have changed.
Might have been the right call to buy early. Lucky to have gotten one before any potential price hikes.
This isn't just Nintendo's problem. Sony is in the same boat. The question is how the entire industry will respond.
Haven't bought Switch 2 yet, but this situation makes timing tricky. Should I buy before a price hike or wait and see...
Medium-to-long-term component contracts are standard, but the risk of memory companies breaking contracts isn't zero. Could get tough depending on market conditions.
President Furukawa is a business pro. I'm sure they've anticipated and prepared for this level of crisis. I believe in Nintendo.
Hardware pricing matters, but ultimately it's about having great games. Looking forward to the 2026 lineup.
In the US, Switch 2 accessories already got price hikes due to tariffs. Grateful the console price was maintained, but worried how long it'll last. $449 is already expensive enough.
In the UK, the £395.99 price tag is quite a stretch for many families. Really hoping the memory price issues don't affect us here too.
PC gaming part prices are rising in Germany too. It's clear AI demand is affecting the entire gaming industry. I understand Nintendo's cautious approach.
Nintendo has always been popular in France, but if prices keep rising, it'll be harder for younger generations to afford. Balancing cost pass-through and adoption is a tough problem.
In Spain, the economy is tough, and a console equivalent to ¥50,000 is a luxury item. I hope Nintendo can keep prices as low as possible.
In Australia, consoles are already expensive due to import costs. Please no more price hikes. Watching President Furukawa's statements closely.
Korea is home to memory makers like Samsung and SK Hynix, but we feel the price surge effects here too. Competition with AI demand is a global challenge.
Canada faced similar tariff issues as the US. Experienced pre-order delays but eventually got one. Worried about future pricing trends.
In Italy, gaming consoles are popular family entertainment. I appreciate Nintendo prioritizing adoption, but watching how they'll overcome cost challenges.
There's high interest in Nintendo products in Sweden. Memory price inflation is an industry-wide issue that gaming alone can't solve - it's a structural challenge.
In Brazil, consoles are very expensive due to import taxes. If Switch 2 gets even pricier, some people might give up on buying one.
PC part price increases have been a hot topic in the Netherlands recently. Figured it was only a matter of time before consoles were affected. Hoping for a good response from Nintendo.
Nintendo's family games are popular in Ireland. Higher prices would make it harder to choose as gifts for kids. Hope they can maintain current pricing.
There's high interest in Switch 2 in China. Memory pricing issues are affecting domestic AI companies like Tencent Cloud too - it's clearly a global challenge.
It's reassuring that Nintendo procures components with medium-to-long-term plans. Their management approach of not being swayed by short-term market fluctuations is commendable.