The artificial intelligence boom has significantly impacted the gaming industry by driving up the prices of memory chips. These chips, crucial components in devices ranging from smartphones to automobiles, saw their prices double in the first quarter alone and are projected to climb by up to 63% in the current quarter. This surge is attributed to the high demand from AI data centers, which is constraining the supply for other tech sectors.
Nintendo and Sony have both acknowledged the effects of these rising memory costs on their gaming businesses. Nintendo anticipates an additional cost of roughly 100 billion yen (approximately $638 million) for the current financial year due to higher component prices, especially memory, and the impact of tariffs. Consequently, Nintendo has raised the price of its Switch 2, with the Japanese model increasing by 10,000 yen to 59,980 yen, and the U.S. model rising by $50 to $499.99. Nintendo also hiked prices for older Switch models and online gaming services.
Similarly, Sony increased the price of its standard PS5 by $100 to $649.99 in the U.S. in March. While Sony has secured memory supply for the current financial year, CEO Hiroki Totoki expects prices to remain high into the next year. Sony aims to reduce costs in other areas and anticipates that PS5 hardware sales will be dictated by the availability of memory at "reasonable prices," with hardware profitability expected to remain consistent with the prior year. The company is investing in its next-generation platform, and the upcoming launch of "Grand Theft Auto VI" in November is expected to boost software margins, helping to offset hardware-margin pressure.
The price increases are seen as a clear signal that AI infrastructure spending is influencing mainstream consumer goods. Analysts note that this mid-cycle price hike for the Switch 2, which is early in its lifecycle, puts more pressure on Nintendo to release more first-party blockbusters to maintain demand. For Sony, PS5 hardware sales are now constrained by memory availability rather than underlying consumer demand. Both companies are grappling with how these increased costs, driven by AI, translate to retail prices for consumers worldwide.
