The vortex of the memory crisis is gripping Nintendo
Because the prices for RAM and flash memory are rising extremely sharply, companies that use such chips in their products are now also coming under pressure. This also includes the Japanese gaming giant Nintendo, after all, the enormous storage costs endanger the company’s profits.
RAM for the Switch 2 costs a good 40% more
Things have actually been going great for Nintendo since the launch of the Switch 2, as the Japanese games company has significantly raised its expectations for the current year when it comes to sales figures for its game consoles and other products. But now the “Super Mario Company” is getting in the way of the memory crisis triggered by the AI boom. According to a report from the US Economic Intelligence Service Bloomberg Nintendo’s share price fell by up to 4.7 percent today because the financial world fears the enormous increase in memory prices will have a negative impact on the company’s sales figures. Things have already been going down in the past few days, so that Nintendo lost almost 10 percent of its market value within just one week.
14 billion loss in market value in a week
Overall, Nintendo has recently lost around $14 billion in market value. The background, of course, is that Nintendo, like everyone else, has had to pay significantly more for RAM and flash storage for a few weeks now. The price of the total 12 gigabytes of RAM installed in the Nintendo Switch 2 rose by 41 percent within just a few weeks, while the flash memory became eight percent more expensive. According to market observers, the optimism surrounding Nintendo that was triggered by the good sales of the Switch 2 is now evaporating, as the company’s profit margins are shrinking sharply as hardware prices rise.
If Nintendo raises prices in order to make more money per device, the new game consoles are less attractive to potential buyers and demand falls. The rising memory prices are also putting Nintendo under indirect pressure. Because the memory cards required due to the limited capacity of the Switch 2 also use flash memory, their prices are currently rising sharply. A sufficiently fast read and write memory card, which is absolutely necessary for the Switch 2, also costs more than a normal model, which means even higher costs for consumers.
Meanwhile, Nintendo seems to want to counteract this with an unusual strategy. Although the Switch 2 only came onto the market a few months ago, a bundle with the game Mario Kart World was recently offered at reduced prices. Customers essentially get the game for free. Nintendo apparently hopes to be able to bring an increased amount of console hardware onto the market as quickly as possible so that they can make money with games and services as soon as the sales figures for hardware products are likely to be slowed down sooner or later due to rising memory prices.
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