Nintendo lost investor confidence: shares fell 45% due to memory shortage

Short version of the news

Console manufacturers are forced to raise prices due to rising memory chip costs. This is especially hard for Nintendo, whose shares fell almost 45 % after peaking in August last year. Under new U.S. tariffs and increasing production costs for the Switch 2, demand could drop if no new attractive games appear.

Nintendo isn’t the only Japanese company hit by the crisis: Sony’s shares fell more than 30 %. The PlayStation 5 uses even more expensive components, so its profitability suffers. Switch 2 buyers are generally younger than competitors’ audiences, making them sensitive to price changes.

Structured recap

1. Reason for price increases
* Rising memory chip costs forced console makers to raise prices.
* Nintendo faced additional U.S. customs tariffs, intensifying pressure on the Switch 2 price.

2. Financial impact for Nintendo
* The company’s shares peaked in August last year and have now fallen almost 45 %.
* Introducing the Switch 2 amid higher costs could hurt demand.

3. Need for new games
* To keep interest in a pricier console, Nintendo must release enough fresh, appealing titles.
* Exclusive games like Pokémon Pokopia already show strong demand (2.2 million copies in the first four days).

4. Industry situation
* Sony faces a similar scenario: shares have fallen more than 30 % since November.
* The PlayStation 5 uses even pricier components, worsening profitability.

5. Consumer sensitivity
* Switch 2 buyers are on average younger and more price‑sensitive than competitors’ audiences.
* The previous generation sold 155 million consoles and 1.5 billion games (≈9.7 games per console). For the Switch 2 it’s only 2.2 games per console in the first year.

6. Expert forecasts
* Rising memory prices could push the Switch 2 price in the U.S. from $450 to $500 in the second half of the year.
* A memory shortage may persist until 2028, complicating market normalization for consoles.
* In June’s Nintendo Direct, new games will be showcased; if they generate interest, sales decline could be less severe.
* A new Mario franchise game is expected, supported by a full‑length film featuring characters from the same universe.

Thus, rising memory costs and related expenses create a tough situation for Nintendo and other console makers. Success will hinge on the company’s ability to attract buyers with new games and manage pricing amid limited memory supply.