It has been claimed by a securities analyst that Nintendo could be shaping up to sell every Switch 2 console ‘at a loss’ based on the estimated costs of the bill of materials. This is because of the recent tariffs imposed by the United States government, and it’s assuming that they stay at 10%.
Uneven Ground
In a report published by Bloomberg, the scope of the financial situation surrounding Nintendo and Trump’s tariffs came into question.
Hideki Yasuda of Toyo Securities in Japan explained:
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.
The Nintendo Switch 2’s price point is much higher than that of the first console, released in 2017, but Nintendo recently went on record explaining why that is. It’s all to do with the quality of the offering and the upgrades over the first console – and inflation also weighs into the debate.
In the Bloomberg report, Bernstein’s Robin Zhu explained how Nintendo could raise prices if the tariffs escalate:
If the tariffs stay at 10%, Nintendo probably keeps pricing at $450 and just takes the hit on margin.
At 46% Vietnam tariffs, I expected them to raise by $50 to $100.
These tariffs are wreaking havoc on the pre-order situation in the United States and Canada. Pre-orders for the Nintendo Switch 2 have been put on hold as manufacturers and retailers across the region contend with what might happen next.
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