Switch 2 expected to maintain profitability amid rising material costs

Nintendo tells investors that sales of its new Switch 2 console should maintain profitability even as individual component costs continue to rise.

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Like its forebear, the Switch 2 was sold at a profit at launch. Nintendo management expects the Switch 2 to keep its current sales profitability "for the time being," even as individual parts, chips, and integrated circuits become more expensive.

In a recent Q&A with investors, Nintendo President Shuntaro Furukawa says that the company will offset any rising costs by shaving off costs in other areas, not unlike what Sony did with its multiple PS5 and PS5 Pro hardware revisions. Other factors like further disruptions from tariffs are outside of Nintendo's control, and Furukawa appropriately warns investors of these risks.

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"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."

The Switch 2 is currently Nintendo's fastest-selling console of all time, reaching 10 million unit sales more quickly than other systems. As a result of Switch 2's overperformance, Nintendo has raised its full-year hardware sales target and now expects to sell 19 million Switch 2 consoles during the fiscal year ending March 2026.