The explosion of artificial intelligence (AI) is creating great pressure on the global game industry as the demand for memory chips surges, making the supply of components increasingly scarce.
The two console giants (specialized game consoles connected to TVs or monitors) Sony and Nintendo both had to adjust selling prices, business plans and profit expectations to cope with the wave of cost increases.
In a new financial report released on May 8 local time, both Sony and Nintendo warned that the sharp increase in memory prices is directly affecting game business operations.
According to analysts, the huge demand from AI data centers has disrupted the supply of chips for phones, laptops, cars and even game consoles.
Memory chip prices are said to have doubled in the first quarter of this year compared to the previous quarter. In the current quarter, the increase could be up to 63% due to prolonged shortages.
Although major manufacturers such as Samsung, SK Hynix and Micron have pledged to invest billions of USD to expand production, experts say it will take at least a year for new production lines to come into operation.
Nintendo said that increased component costs, especially memory chips, along with the impact of tariffs will cause the company to bear an additional 100 billion Japanese Yen in costs in this fiscal year.
Chairman Shuntaro Furukawa said this is one of the main reasons leading to the decision to increase the price of the Switch 2 model.
Accordingly, the Japanese version of Switch 2 will increase by 10,000 Yen, to 59,980 Yen. In the US, this console model also increased by 50 USD, to 499.99 USD.
Mr. Furukawa admitted that the price increase does not significantly improve profits due to escalating input costs. Nintendo is currently expected to sell 16.5 million Switch 2 units this year, lower than the 19.9 million units of last year.
Observers believe that Nintendo is facing many risks because the company's customer group is very sensitive to prices.
Not only Nintendo, Sony has also increased the price of PlayStation 5 from March this year. In the US, the standard version of PS5 increased by another 100 USD, to 649.99 USD.
CEO Hiroki Totoki said Sony has ensured sufficient memory supply for the current fiscal year, but component prices are forecast to continue to be high next year. The company is currently looking for ways to further cut costs in other departments to reduce pressure.
Sony forecasts that game revenue will decrease this year but profits may still increase thanks to software revenue and online ecosystems. In particular, the company expects a major boost from the launch of the game Grand Theft Auto VI in November after many delays.
This game can bring in huge software revenue for Sony thanks to its high profit margin and the ability to encourage users to return to the PlayStation ecosystem.
In the context of AI continuing to drive the global data race, the pressure of memory chip shortages is forecast to continue to prolong.
