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Impacts of Memory Costs

Korea Economic Daily reported that IT companies are entering “survival mode” due to runaway memory costs:

  • 2GB DDR5 price +136.8% in 1 month
  • 64GB TLC NAND price +14.21% in 1 week
  • Nvidia & AMD are considering discontinuation of mid- to low-end GPU cards
  • Notebook prices are expected to rise by 5–15%
  • Smartphone production is expected to contract by -2.0%, and PC production -2.4%

This echos the recent Morgan Stanley reports about memory makers’ “maximum pricing power” and OEM/ODM makers’ “risk of margin pressure”. (image sources: Hupu and Moomoo)

Image clip of Morgan Stanley Research report: Memory – Maximum Pricing Power
Image clip of Morgan Stanley Research report: Memory Takes A Bite Out of Hardware Margins

Although Furukawa claimed recently that the rising material costs can be offset by production cost reduction, I’m not certain that Nintendo anticipated this level of upheaval.

Q6 I'd like to verify how the increase in component costs affects the profitability of Nintendo Switch 2 hardware. While the cost of memory modules has been increasing lately, if this trend continues after you have exhausted your current stock of components, what will be the impact? Is there a possibility that the hardware profitability could decline? A6 Furukawa: We believe that we'll be able to maintain the current level of profitability for hardware for the time being unless there are significant changes in external factors, such as a shift in tariff assumptions, or other unexpected events. While we are aware that the costs of various materials are rising, we also anticipate some areas where cost reduction may be achieved for Nintendo Switch 2 through ongoing mass production efforts. Therefore, currently we do not expect the recent rise in material costs to greatly impact profitability. We will continue our efforts to maintain the same level of profitability as we currently have.

In retrospect, Switch 2’s modest 256GB storage and 8nm node were a good hedge against the AI-fueled cost escalation.

Related post: Memory price and other issues facing Game Card

[Originally posted on 2025-11-18 Pacific Time]