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Nintendo bleeds $14 billion market cap over worries about DRAM shortages and price increases (12GB of RAM modules for Switch 2 have gone up by 41%)

LectureMaster

LectureMaster

Or is it just one of Adam's balls in my throat?

TL;DR: Nintendo shares dropped nearly 5%, losing $14 billion due to rising DRAM and NAND prices impacting Switch 2 production costs. Memory chip price hikes, including 41% for DRAM and 8% for NAND, are expected to continue through 2026, affecting console pricing and gamer expenses until potential relief in 2028.


Nintendo shares have slid as much as 4.7% on Wednesday, hitting their lowest levels since May, wiping $14 billion in market share, as there are major concerns over the increasing price of DRAM memory chips required for the Switch 2.

Inside of the Nintendo Switch 2 is 12GB of RAM which the company needs, but they have gone up a huge 41% in the last quarter, with the NAND storage board for the Switch 2 also now 8% more expensive, and expected price increases for the add-on storage cards in 2026, too.

Pelham Smithers of Pelham Smithers Associates said: "The rise in NAND prices is starting to really impact express SD card prices. A 256GB express SD card costs $89.99 on Amazon. This is effectively a cost that Nintendo has passed on to the gamer".

Smithers also said that the recent Black Friday sales for the Nintendo Switch 2 + Mario Kart World bundles were one of the seasonal sales "surprises", adding: "you wouldn't expect it (Nintendo Switch 2 + Mario Kart World bundle) to be discounted this close to the holiday season".

These issues for Nintendo aren't exclusive to the Japanese company, as Microsoft has been -- rather blazingly -- increasing the cost of its Xbox Series X/S consoles, even when they've been bleeding out console market share to Sony and its dominating PlayStation 5 and PS5 Pro consoles.

We should expect the pain to continue well into 2026, and into 2027, before some (possible) relief arrives in 2028 for DRAM.
 
Gaiff said:
OP is wrong. Some Gaffers told me consoles don't use RAM, only PCs do.
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adzk7r.jpg
 
Let's see them sue their way out of this mess. I do wonder what these inevitable price hikes are going to do to consoles long term though. Will the public not care and pay the increased prices with no real issue? Will people move to other hobbies until the prices right themselves? Will prices come back down when RAM shortages are addressed in 27/28? (heh).
 
Holy shit, this hike. I wonder if the Switch 2 will have a price increase either

Back in the day we used to have console getting cheaper, but now everything is getting expensive, and now for a second wave... Jesus
 
The funny part is, all these moron investors panicking, the $14 billion lost in value is probably going to be a lot more than what it would've cost Nintendo in actual costs for RAM increases.

Let's assume 12 GB RAM is $100 (it's not), so 41% increase would be $41 per Switch 2 that Nintendo would have to absorb if no price increases.

$41 per million sold, that's $41 million, or $411 million per 10 million units, or $4.1 billion per 100 million units. Even if Nintendo had to absorb $400 million in losses to their profits yearly, it still wouldn't matter to their overall profits much, which are over $3 billion.

The $14 billion panic did a lot more damage.

Yes, the devices will get more expensive, but demand is still there.
 
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Tobimacoss said:
The funny part is, all these moron investors panicking, the $14 billion lost in value is probably going to be a lot more than what it would've cost Nintendo in actual costs for RAM increases.

Let's assume 12 GB RAM is $100 (it's not), so 41% increase would be $41 per Switch 2 that Nintendo would have to absorb if no price increases.

$41 per million sold, that's $41 million, or $411 million per 10 million units, or $4.1 billion per 100 million units. Even if Nintendo had to absorb $400 million in losses to their profits yearly, it still wouldn't matter to their overall profits much, which are over $3 billion.

The $14 billion panic did a lot more damage.

Yes, the devices will get more expensive, but demand is still there.
Click to expand...

At this point it's less the memory and more the surprise panic Cyber Monday discount in response to Sony's old and busted vagina outselling them 2:1. Their recent first party games have also been received lukewarmly at best, letting EAD spend 8 years on an experimental Donkey Kong pseudo-Minecraft ripoff was catastrophically stupid.
 
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Will be interesting to see how Nintendo deals with it, if RAM prices remains a long term issue.
They had serious problems with chip shortages during the 8-bit era, which prompted them to develop the Famicom Disk System. My guess, they'll port games meant to be S2 exclusives to vanilla Switch and expand its lifetime.
 
Majima Everywhere System said:
Has anyone stated what is causing these RAM shortages?

The article doesn't say. Maybe the author is to blame!
Click to expand...
Samsung, SK Hynix and Micron, the only three major DRAM producers are being paid so much by AI companies that they have essentially stopped producing consumer level RAM and are only producing RAM for AI data centers (HBM, High Bandwidth Memory).
Everything from cars, phones, consoles, computers and other such products will all eventually start having supply problems and the prices will inevitably sky rocket.
 
Tobimacoss said:
The funny part is, all these moron investors panicking, the $14 billion lost in value is probably going to be a lot more than what it would've cost Nintendo in actual costs for RAM increases.

Let's assume 12 GB RAM is $100 (it's not), so 41% increase would be $41 per Switch 2 that Nintendo would have to absorb if no price increases.

$41 per million sold, that's $41 million, or $411 million per 10 million units, or $4.1 billion per 100 million units. Even if Nintendo had to absorb $400 million in losses to their profits yearly, it still wouldn't matter to their overall profits much, which are over $3 billion.

The $14 billion panic did a lot more damage.

Yes, the devices will get more expensive, but demand is still there.
Click to expand...

That's not how market caps work.
 
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Braag said:
Samsung, SK Hynix and Micron, the only three major DRAM producers are being paid so much by AI companies that they have essentially stopped producing consumer level RAM and are only producing RAM for AI data centers (HBM, High Bandwidth Memory).
Everything from cars, phones, consoles, computers and other such products will all eventually start having supply problems and the prices will inevitably sky rocket.
Click to expand...

Majima Everywhere System said:
Has anyone stated what is causing these RAM shortages?

The article doesn't say. Maybe the author is to blame!
Click to expand...

Important to add, the 3 major DRAM manufacturers are a proven and admitted price fixing racket who have declared to international courts under multiple class action lawsuits that they collude to intentionally limit supply to keep prices high, dating back decades. AI just so happens to be the best "excuse" they've ever had by a country mile. And they have all already said, while grinning ear to ear with a shit eating grin, they will not be increasing production capacity.
 
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Holammer said:
Will be interesting to see how Nintendo deals with it, if RAM prices remains a long term issue.
They had serious problems with chip shortages during the 8-bit era, which prompted them to develop the Famicom Disk System. My guess, they'll port games meant to be S2 exclusives to vanilla Switch and expand its lifetime.
Click to expand...
I think Nintendo should try something different. Rather than making Switch 1 ports, they should allow streaming versions on the $100 Ultimate editions of their games to be streamed to Switch 1.

Kinda like how Xbox One users can still stream many if not most of the Series exclusive games.

So streaming would still extend the lifetime of the old Switch devices, still keep things within the Nintendo ecosystem of devices, and bring in new revenues from more expensive versions.

Nintendo has a streaming partner Ubitus, who is partnered with Azure, that they were using for third party streams. They should do that for their own games. Stream from Switch 2 hardware to all Switch 1 and 2 devices.

So build the games for Switch 2, sell the native license for Switch 2, and have it come included with a streaming license for Switch 1 and 2.
 
Maybe ms deliberately stopped making consoles because they forsaw this coming. They weren't selling much anyways why spend more money producing the same systems no one is buying.
 
Haint said:
At this point it's less the memory and more the surprise panic Cyber Monday discount in response to Sony's old and busted vagina outselling them 2:1. Their recent first party games have also been received lukewarmly at best, letting EAD spend 8 years on an experimental Donkey Kong pseudo-Minecraft ripoff was catastrophically stupid.
Click to expand...

A real panic would be the 3DS situation where Nintendo did a permanent price drop and Ambassador program for early buyers because the system was struggling to sell.

They are dominating their home market of Japan and global sales are quite strong for Switch 2 this year.

Not sure why it's shocking that PS5 sold quite well on Black Friday with a $100 price drop. Sony wants those still playing on PS4 to finally upgrade to this generation.
 
OuterLimits said:
The original Switch is still selling fairly well in Japan. Heck, it just doubled the sales of the PS5 despite Sony doing a significant price drop.

The odds are decent it crawls beyond the PS2 sales eventually.
Click to expand...
Sony: Did we say 160 million? Actually there were 5 million sales in Bangladesh and Indonesia that we never counted. So 165 million.
 
Time to buy some stock.

This is stupid. Switch 2 is doing great and will continue to do so, even if there are price increases. Everyone is subject to component price hikes.
 
Kacho said:
I really should have spent more on my GPU a few years ago. My 12GB VRAM is gonna tap out soon.
Click to expand...

Nah, you'll probably be fine. The base PS5 when you take into account having a shared memory pool with the CPU, is barely getting above 8gb of vram usage for graphics, and even with console optimization it's not gonna surpass a 12gb vram gpu.

If anything this ram price increase will influence games to scale down further if they wanna hit a wide target audience.
 
Nintendo actually gets hit with a double blow from the component price hikes: 1st the RAM like the article says, and also the NAND prices will impact flash memory prices and will definitely hit game card prices (and sd cards).

Get ready for a lot more Game key cards hitting the market..
 
Yeah, this might turn out to be the Ps5/XBS scenario all over again where you pretty much got the best deal on it at launch.
Black And White Vintage GIF
 
Unknown Soldier said:
Nintendo trying to sell as many as possible before they are forced to raise prices suddenly makes their unusual Cyber Monday flash sale make sense
Click to expand...

Does it make sense?

The consoles will roll off the production line at the same rate. Selling more consoles today won't mean that they will have more consoles with lower price ram to sell, surely?

Or to put it another way:

They can make a million consoles before the ram price goes up. That number doesn't change if they sell that million consoles in an hour or a month.

Once those consoles are sold, they are out of lower price ram and have to pay more to make the console. Why is the sale price related to an impending component price increases?
 
Tobimacoss said:
The funny part is, all these moron investors panicking, the $14 billion lost in value is probably going to be a lot more than what it would've cost Nintendo in actual costs for RAM increases.

Let's assume 12 GB RAM is $100 (it's not), so 41% increase would be $41 per Switch 2 that Nintendo would have to absorb if no price increases.

$41 per million sold, that's $41 million, or $411 million per 10 million units, or $4.1 billion per 100 million units. Even if Nintendo had to absorb $400 million in losses to their profits yearly, it still wouldn't matter to their overall profits much, which are over $3 billion.

The $14 billion panic did a lot more damage.

Yes, the devices will get more expensive, but demand is still there.
Click to expand...
It's not how it's work
Nintendo profit 3bn on 86bn market cap means 3.5% ROE
So if profit due to chip shortages drop by 400mn - it'll be 2.6bn profit
To maintain same ROE, market cap should drop to 74bn.
Article is shit though, it was not 14bn as Nin market cap is not 280bn

There are multiplicators between profit and share price, it's why market cap moves are order of magnitude greater than profit moves
 
The timing of it is definitely worse for Nintendo than others.

They are going to be wanting to manufacture a lot of Switch 2's in 2026. Price rise is likely.

The physical game cartridges are NAND so the cost of making them is going up too, and they were already expensive.
 
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Braag said:
Samsung, SK Hynix and Micron, the only three major DRAM producers are being paid so much by AI companies that they have essentially stopped producing consumer level RAM and are only producing RAM for AI data centers (HBM, High Bandwidth Memory).
Everything from cars, phones, consoles, computers and other such products will all eventually start having supply problems and the prices will inevitably sky rocket.
Click to expand...
AI really is the gift that keeps on giving!
 
GHG said:
That's not how market caps work.
Click to expand...
The poster was doing a comparison. How much it would cost them, vs how much value they supposedly lost because of it. In a sense that is exactly how market caps work, the market reacts to information and the overall price of shares summarize their response.

That said, it was not just the RAM, It is a combination of the cost increase, losing black Friday to Sony, and meh reviews for their supposed big holiday titles. The market has plenty of reason to sell and park money elsewhere.
 
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