Nintendo may sell Switch 2 at loss in US, analyst predicts

Nintendo will sell the Switch 2 at a loss in the United States even before any potential effect from tariffs, one analyst firm has estimated.

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With its new custom NVIDIA Tegra chip, built-in faster storage, upgraded RAM, and other peripheral upgrades, the Nintendo Switch 2 is much more advanced than its predecessor. It's also expected that the Switch 2 is a lot more expensive make than the Switch 1. It's even possible that Nintendo will sell the Switch 2 at a loss in some global markets, including the U.S.

Analyst firm Toyo Securities estimates that the Switch 2 costs at least $400 to make, and that selling Switch 2 consoles with the effects of a 10% tariff (these units would have been made in Vietnam, and US tariffs against Vietnam are at 10% right now) would still be incurred at a loss. Conversely, the Switch 1 was sold at a profit on day one. Nintendo had previously said that the Switch 2 would be priced with profitability and foreign exchange rates in mind.

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Toyo Securities analyst Hideki Yasuda tells Bloomberg:

"We believe the Switch 2's bill of materials is around $400, meaning Nintendo would still be selling consoles at a loss in the US with the 10% tariff - but the loss would be something Nintendo would be able to absorb. Sony is in a tougher situation as most of its PlayStation production is in China, and it may be forced to hike PS5 prices in the US in the near future."

Nintendo is trying to minimize any impact from trade tariffs. A while back, Nintendo started diverting some of its hardware production to facilitates in Vietnam. These consoles would be made in Vietnam and imported from Vietnam, and not from China. Now that the US has high tariffs against China, Nintendo is currently trying to move as much stock from its Vietnam plants over to the United States.

Nintendo also has a lot of consoles that were made in China, but it doesn't want to import those because they will be subjected to a much higher tariff rate.

The company has delayed Switch 2 pre-orders in the United States as it figures out its next move and calculates the effects of the ongoing global trade scuffles.