Nintendo’s struggle with memory chip shortages has caused its shares to drop more than 10%, despite beating profit estimates for the quarter. The company reported a 24% profit increase year-over-year, thanks in part to the popularity of the Nintendo Switch, released in 2017, which is now its best-selling console. Overall revenue surged by 86%.
However, challenges loom. Current shortages in dynamic random access memory (DRAM)—a key component in Nintendo’s consoles—are increasing costs. Andrew Jackson, a Japanese equity strategist, shared concerns that high memory prices could hurt profit margins. This memory crunch is largely driven by the rising demand from AI technologies and data centers.
Experts predict that the contract prices for DRAM chips might rise by as much as 95% from the previous quarter. The shortage isn’t expected to ease until at least 2027, as noted by a leading semiconductor industry CEO.
Despite these hurdles, Nintendo is sticking to its full-year sales forecast for the new Switch 2, launched in June of last year. Upcoming game titles, like “Mario Tennis Fever” in February and “Pokémon Pokopia” in March, are highly anticipated and may give sales a boost. Additionally, the planned release of “The Super Mario Galaxy Movie” in April could further invigorate interest, similar to how the 2023 Super Mario movie positively affected console sales.
Analysts like James McWhirter from Omdia see 2026 as a critical year for Nintendo. As the company attempts to gain broader appeal, it must navigate these supply chain difficulties while meeting consumer expectations.
User reactions on social media reflect a mix of excitement and concern regarding the Switch 2. Many fans are eager for new games, but worry about whether the console will live up to its predecessor’s success.
In summary, while Nintendo enjoys short-term gains, its future success hinges on overcoming supply chain challenges and delivering quality gaming experiences.
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