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Nintendo Switch 2 Costs Soar, Profit Margins Threatened
10 Dec
Summary
- Nintendo shares declined due to component cost increase fears.
- RAM module costs for Switch 2 jumped 41% this quarter.
- NAND storage and add-on cards also experienced price hikes.
Nintendo Co.'s stock experienced a notable decline, reaching its lowest point since May, amid investor concerns regarding escalating component prices. The primary worry centers on the surging cost of essential parts, particularly memory chips, which is anticipated to significantly impact the company's profitability.
The gaming giant is grappling with rapidly increasing memory costs that pose a threat to the profit margins of its highly anticipated Switch 2 console. These rising expenses could also potentially dampen consumer demand for the new device and its accessories as overall costs increase.
According to market intelligence firm TrendForce, the price for the 12GB RAM modules within the Switch 2 has seen a substantial 41% increase in the current quarter. Furthermore, the NAND storage components included in the console have also become nearly 8% more expensive, with a similar cost escalation affecting add-on storage cards.
