Nintendo president says a long-term memory shortage 'may put pressure on profitability'
Nintendo president Shuntaro Furukawa has said the company is working to secure "stable supplies" of memory components in order to preserve the price of Switch 2 hardware, but warned costs are rapidly increasing.
Furukawa was repeatedly quizzed about the potential impact of the current global memory shortage during the company's latest earnings Q&A.
As reported by Reuters, the squeeze is being caused companies heavily investing in AI technology and has begun to impact the wider electronics industry. Earlier this week, for instance, Valve postposed the reveal of key pricing and shipping details for its upcoming Steam hardware lineup—including the console-like Steam Machine—as a result of the situation.
Weighing in on the matter, Furukawa said recent increases in memory prices did not have a "significant impact" on hardware profitability during the third quarter of the current fiscal year. He explained the company has been discussing the shortage from a "long-term perspective" with its business partners and doesn't expect any impact in the near-term. Beyond that, however, things look less certain.
"If this rise in component prices lasts longer than expected and runs through the next fiscal year and beyond, it may put pressure on profitability. If the situation deteriorates significantly, we will carefully assess market trends and respond," he added.
"As for any future change in the price of Nintendo Switch 2 hardware, no decision has been made at this time. Any decision to change the price will be determined comprehensively, taking into consideration not only profitability, but also other factors like the platforms installed base, sales trends, and the market environment."
"What we are focusing on is profitability on a global basis"When asked whether Nintendo would prioritize expanding its Switch 2 install base or ensuring hardware profitability amid a potential component shortage, Furukawa said the company is focused on "profitability on a global basis" while reducing costs by mass producing console hardware. He also, however, noted that memory prices are currently increasing as a "pace that exceeds our expectations."
"In general, the profitability of hardware tends to improve with economies of scale, and we want to continue to reduce costs as much as possible through mass production of Nintendo Switch 2 hardware," he added.
"With regard to not selling hardware at a loss, what we are focusing on is profitability on a global basis. There are various external factors, such as fluctuations in exchange rates, but looking at the global picture, we have traditionally tried to avoid situations where individual units are sold at a loss as much as possible.
"It is difficult to predict the changes in the external environment that are currently taking place, but I think it is not an appropriate approach to be excessively influenced by short-term trends. The second and third years for Nintendo Switch 2 are very important, and if we can expand the hardware installed base, we can use that as a basis to greatly expand software sales."
You can read the full Q&A on the Nintendo IR website.
