Nintendo Faces $14B Hit in Market Value as Memory Chip Costs Surge

• Nintendo’s shares tumbled 4.7%, marking their lowest since May, as soaring memory-chip costs concern investors.
• Rising Switch 2 component prices, including RAM and NAND, threaten the console’s profitability.
• With the holiday rush underway, Nintendo faces pressure to manage pricing, inventory, and margins carefully.
  

Nintendo's shares fell by as much as 4.7% on Wednesday, reaching their lowest level since May. This dip comes as investors become concerned about the gaming industry's jittery situation amid rising memory-chip prices.

Industry sources say that growing component costs could impact the profitability of Nintendo Switch 2 in the future, possibly requiring the company to reconsider its pricing strategy or accept lower margins as the market approaches 2026.

TrendForce data shows that the 12 GB RAM modules used in the Switch 2 are currently 41% more expensive than they were at the beginning of the quarter. NAND flash, the non-volatile memory utilized for the console's internal storage, has also become more expensive.

The cost of the Switch 2's built-in memory has increased by approximately 8%. Add-on storage cards (microSD/Express-storage cards), on which many users rely, have also increased by a similar margin.

Nintendo Hit by Memory Crunch, Broader Tech Industry Strained

The whole memory market is tightening. Global demand, fueled primarily by AI data centers, is pushing most production towards enterprise buyers, thus pressurizing the supply chain of consumer devices and electronics such as game consoles. Manufacturers have also shifted the chip production capacity onto server-grade memory and high-bandwidth chips, allowing less space for conventional components.

This trend is not only affecting consoles, but also PCs, phones, and laptops. PC manufacturers, including Dell Technologies and HP, have stated that they may opt for price increases next year as component costs climb at an alarming rate.

TrendForce data cited by The Indian Express revealed that Samsung and SK Hynix, together, account for 70% of the entire RAM market, have increased DRAM and NAND prices by up to 30%. Samsung has also raised server SSD costs by 35% and boosted RDIMM rates by nearly 50%. 

Retail marketplaces are already exhibiting these developments. Last year, a 16GB DDR4 RAM stick was around ₹3,000 in India. Today, it is around ₹5,100. It conveys a clear message. With prices rising so quickly, hardware manufacturers will either absorb the increased component costs or pass them on to customers in the coming days.

Worse Timing for Nintendo, Market Confidence Falters as Holiday Season Arrives

The timing of this price surge could not have been worse for Nintendo. Its shares fell within the first eight trading days of December, wiping out over $14 billion USD in its market value this month alone, reported The Business Times.

The Switch 2 debuted with tremendous demand, but with the arrival of the holiday season, the stakes will clearly be raised further. Cost transparency is critical during this period, as the margins are put to the test.

The situation calls for strategic decisions, ranging from inventory management to promotional discounts. Experts have also cautioned that margins may be tight and consumer demand may weaken until supply stabilizes or pricing is changed.

The memory-chip strain is already shaping up as a crucial test of the Switch 2's long-term viability. Therefore, the company must handle these issues while tactfully balancing the console's demand, pricing, and profitability during the most significant sales period of the year.