Sony and Nintendo are feeling the pinch from skyrocketing memory chip prices, as the AI boom consumes global supply and disrupts the tech sector.
Memory chip prices doubled in the first quarter alone and are forecast to climb up to 63 percent in the current quarter, driven by AI data center demand. While top producers like Samsung, SK Hynix, and Micron plan massive investments, new production lines take at least a year to come online.
Nintendo said higher component costs, particularly memory, and the impact of tariffs will add roughly 100 billion yen ($638 million) to costs this financial year. President Shuntaro Furukawa said those factors are reflected in the price hike for the Switch 2. The Japanese language model will go up 10,000 yen to 59,980 yen, while the U.S. version will cost $50 more at $499.99.
Sony announced in March it would raise PS5 prices, with the standard version jumping $100 to $649.99 in the U.S.
Nintendo's risk is higher, analysts say, because the Switch 2 is early in its lifecycle and its casual user base is particularly price sensitive. Nintendo needs more blockbuster titles to boost demand. The company expects to sell 16.5 million Switch 2 units this year, down from 19.9 million last year.
Sony said memory supply is secured for this financial year, but prices should remain high into next year. CEO Hiroki Totoki says the company is looking to cut costs elsewhere.
A major boost for Sony could come from the delayed launch of Take-Two Interactive's 'Grand Theft Auto VI,' scheduled for November, which is expected to drive high-margin software sales.