Nintendo Switch 2: Sales Drop 41% Amid Memory Costs

Nintendo posted a sharp decline in Switch 2 hardware sales for its fiscal second quarter, a drop driven by higher prices and persistent supply chain issues. The Japanese company sold 2.67 million units of the console in the three months ended Sept. 30. That figure represents a 41% decrease compared to the same period last year. It also marks a slowdown from the 3.82 million units sold in the previous quarter.

The revenue miss followed a strategy of raising prices to offset rising component costs. During the quarter, Nintendo increased the cost of the Switch 2 in the United States, Canada, and Japan. This move followed an earlier price hike in Japan earlier in the year. The primary driver was a shortage of memory chips, a core component of the device. High demand for these chips has caused a surge in their market price, squeezing Nintendo's margins.

Financial results for the quarter fell short of analyst projections. Nintendo reported revenue of 448.2 billion Japanese yen, or $2.8 billion. The LSEG average estimate had projected revenue of 481.37 billion yen. Net profit came in at 73.5 billion yen, below the expected 82.16 billion yen. Despite these lower figures, the company maintained its forecast for the current fiscal year, which ends in March 2027. It still projects selling 16.5 million Switch 2 units.

Game library availability complicates the sales picture. Nintendo released strong titles this year, including "Tomodachi Life: Living the Dream" and "Pokémon Pokopia." The latter became a viral hit. However, the company lacks major marquee titles to drive hardware purchases in the near term. The release of the "The Legend of Zelda: Ocarina of Time" remake on Thursday aims to change that. Investors are watching to see if this iconic title can boost momentum.

Serkan Toto, CEO of Kantan Games, noted that the remake is the only real blockbuster for the current fiscal year. He told CNBC that this is not enough to satisfy investors, particularly given the console's higher price point. Toto stated that selling hardware is increasingly difficult and that only major hits help. He advised that Nintendo must accelerate its release schedule to deliver more big games next fiscal year to maintain Switch 2 momentum.

The company has additional titles planned for the following year. New Pokémon games are slated for release in 2027. These releases are expected to support sales as the company navigates the current hardware cycle.