AI memory chip surge pushes Switch 2 and PS5 prices higher

TL;DR:

• Memory chip prices doubled in the first quarter from the previous quarter and are forecast to climb up to 63% in the current quarter due to AI data centre demand, hitting supply for smartphones, laptops, automobiles and consoles.
• Nintendo expects roughly ¥100 billion (about $638 million) in extra costs this financial year, has raised Switch 2 prices by $50 to $499.99 in the US and 10,000 yen in Japan, and lowered its Switch 2 unit forecast to 16.5 million from 19.9 million last year.
• Resultsense view: this is the clearest mainstream-consumer signal yet that AI infrastructure spending is reaching beyond the data centre — UK families buying a Switch 2 or PS5 this Christmas will be paying a premium that traces directly back to GPU clusters in the United States.

Nintendo president Shuntaro Furukawa told an earnings briefing that higher component costs and exchange-rate effects were reflected in the Switch 2 price hike. Sony, which raised PS5 prices by $100 in March to $649.99 in the US, plans to spend up to ¥500 billion buying back shares. Sony chief executive Hiroki Totoki said memory prices were expected to remain high into next financial year even though Sony has secured supply for the current one.

What the chip squeeze looks like

Top memory producers Samsung, SK Hynix and Micron have pledged billions of dollars of new investment, but experts cited in the Reuters report say it takes at least a year for a new production line to come online. Until then, AI data centre demand — the heaviest user of high-bandwidth memory — is crowding out supply for every other category, from smartphones to in-car infotainment systems.

HSBC analyst Kazunori Ito put Nintendo’s decision bluntly: “The very fact that Nintendo felt compelled to act 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.”

The consumer-margin trade-off

Nintendo’s price-sensitive casual user base is unusually exposed to a mid-cycle price hike. Kantan Games consultancy founder Serkan Toto told Reuters the Switch 2 is early in its lifecycle and Nintendo is now under “more pressure than ever to get more first-party blockbusters out this fiscal year” to support demand at the new price point. Recent successes including “Pokemon Pokopia” and upcoming “Star Fox” titles have not yet filled what the report describes as a relatively thin pipeline.

Sony’s PS5 hardware sales are now constrained by how much memory it can secure at “reasonable prices” rather than by underlying demand. The forthcoming launch of Take-Two Interactive’s “Grand Theft Auto VI” in November is expected to drive software margins higher and offset some of the hardware-margin pressure.

UK relevance

UK retail prices for these consoles will move with the underlying USD pricing and prevailing exchange rates. The deeper UK story is that AI-driven memory price pressure is now showing up in consumer goods inflation, not just in capex line items at hyperscalers. For UK economic forecasters and retailers, AI infrastructure costs have become a small but visible input cost factor in the wider electronics category — exactly the kind of supply-side AI effect that has been theorised about in academic papers and is now showing up at the till.

Looking forward

Watch for whether memory prices peak before the new production capacity comes online in late 2026 or early 2027. Until then, expect more announcements like Nintendo’s: AI infrastructure pulling chip supply away from consumer electronics, and consumer brands passing the cost through to retail prices.