n have pledged to boost output with billions of US$ of investment, it takes at least a year for a new production line to come online, experts say. Super Mario maker Nintendo said that higher component costs, particularly memory, and the impact of tariffs is expected to add roughly 100 billion yen (US$638 million) to costs in the current financial year. “The very fact that Nintendo felt compelled to act (price increase) suggests the rise in memory costs has become severe enough that it could no longer be absorbed internally – and, crucially, that there is little prospect of those cost pressures easing in the near term,” HSBC analyst Kazunori Ito said. “This decision likely reflects a sober assessment that waiting for market conditions to improve is not a viable option.” President Shuntaro Furukawa said higher component costs, along with exchange rates, were reflected in Nintendo’s decision to hike the prices of its Switch 2. The price of a Japanese-language Switch 2 Japan model will increase by 10,000 yen to 59,980 yen, while the gaming device in the US will cost US$50 more at US$499.99. With the price hikes, profitability will be roughly unchanged from last financial year, Furukawa told an earnings briefing. Sony announced in March it would increase prices of the PS5, with the standard version of its gaming device jumping US$100 to US$649.99 in the US. Nintendo users seen as particularly price sensitive For Nintendo, the hikes pose risks, as the Switch 2 is early in its lifecycle and its casual user base is particularly price-sensitive, said Serkan Toto, founder of the Kantan Games consultancy. “Nintendo is now under more pressure than ever to get more first-party blockbusters out this fiscal year” to boost demand for the system, Toto said. The firm’s games pipeline is seen as thin, although it has scored a recent hit with Pokémon Pokopia and upcoming titles include Star Fox. Nintendo also hiked the prices of its older Switch models and its online gaming services, and said its playing cards will move from a listed price to an open price set by retailers. The company expects to sell 16.5 million Switch 2 units this year, compared to 19.9 million units last year, and 60 million software units. Sony and Nintendo’s shares have been under pressure in recent months as investors fret about the impact of disruption to supply chains from the AI boom and the Iran war on electronic manufacturers’ margins. Sony, which plans to spend up to 500 billion yen buying back shares, said it sees lower sales but higher profits at its gaming business this financial year. Sony has secured memory supply for this financial year, but prices are expected to remain high next year, CEO Hiroki Totoki told an earnings briefing. The company is looking at ways to reduce costs outside of memory, he said. PS5 hardware sales are based on the amount of memory Sony can secure at “reasonable prices”, with hardware profitability expected to be similar to a year earlier. With the PS5 in its sixth year on the market, the profit forecast incorporates investment in Sony’s next-generation platform. Sony is expected to receive a major boost from the launch of Take-Two Interactive’s delayed Grand Theft Auto VI, which is scheduled for release in November. “Sony’s bottom line stands to benefit significantly from the high-margin software sales and ecosystem engagement this launch should trigger,” Amir Anvarzadeh of Asymmetric Advisors wrote in a note. Reporting by Sam Nussey. Additional reporting Kritika Lamba and Anton Bridge. Editing by Elaine Hardcastle. All courtesy of Reuters. Further reading: Surging memory chip prices dim outlook for consumer electronics makers