Nintendo and Sony are facing memory chip shortages due to surging prices amid artificial intelligence infrastructure demands, constraining chip supply.
Memory chip prices doubled in the first quarter alone from the previous quarter and are forecast to climb up to 63% in the current quarter due to AI data center demand. This has impacted supply for smartphones, laptops and automobiles.
Top producers like Samsung, SK Hynix, and Micron have pledged to boost output with billions of dollars of investment, however it takes at least a year for a new production line to come online according to experts.
Nintendo said that higher component costs, particularly memory, and the impact of tariffs is expected to add roughly 100 billion yen ($638 million) to costs in the current financial year.
President Shuntaro Furukawa said the higher component costs, along with factors including exchange rates, were reflected in Nintendo’s decision to hike prices of its Switch 2.
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According to Reuters, the price of the Japanese language Switch 2 Japan model will go up by 10,000 yen to 59,980 yen, with the gaming device in the U.S. to cost $50 more at $499.99.
Furukawa told earnings briefing that with the price hikes, profitability will be roughly unchanged from last financial year. In March, Sony said that it is raising the global prices of its PlayStation 5 consoles, including a $100 increase in the U.S.
Serkan Toto, founder of the Kantan Games, said that for Nintendo the hikes have risks as the Switch 2 is early in its lifecycle and its casual user base is particularly price sensitive.
“Nintendo is now under more pressure than ever to get more first-party blockbusters out this fiscal year” to boost demand for the system, Toto said.
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Sony, which plans to spend up to 500 billion yen buying back shares, said it sees lower sales but higher profits at its gaming business this financial year. CEO Hiroki Totoki said in an earnings call that Sony has secured memory supply for this financial year but prices are expected to continue to be high next year. He added that the company is looking at ways to reduce costs outside of memory.
The rise in prices has been attributed to the recent hike in RAM and storage costs, due to the booming demands of the AI industry. Nintendo also reportedly faced pressure from U.S. President Donald Trump’s tariff plans announced around the console’s release, and analysts have suggested uncertainty caused by the war in Iran could have an effect on supply chains.
When Sony announced it was raising the price of its PlayStation 5 by £90 in the UK and $100 in the U.S., it blamed “continued pressures in the global economic landscape.”