Nintendo Posts Strong Financials Amidst Switch 2 Success, Eyes Chip Supply Challenges

Nintendo has reported significantly increased financial results for the nine months ending December 31, 2025. This surge is primarily driven by the successful launch and strong sales performance of its new console, the Nintendo Switch 2. The company announced global sales of 17.37 million Switch 2 units by the end of December.

Concurrently, Nintendo acknowledged ongoing challenges related to the rising costs and securing of semiconductor memory chips, which could impact future profitability. Despite these concerns, the company maintained its full-year Switch 2 sales forecast.

While some reports indicated quarterly revenue missed market estimates, the company's profit exceeded expectations, increasing 24% year-on-year. Company shares declined more than 10% after quarterly revenue reports and have lost over 15% year-to-date.

Financial Highlights: Q3 2025

For the nine months ending December 31, 2025, Nintendo reported impressive growth:

• Net sales reached ¥1.9 trillion ($12.3 billion), marking a 99.3% increase year-on-year.
• Operating profit rose by 21.3% to ¥300.4 billion ($1.9 billion).
• Ordinary profit totaled ¥445.8 billion ($2.9 billion), representing a 39.4% increase year-on-year.
• Net profit increased by 51.3% to ¥358.8 billion ($2.3 billion).

Nintendo Switch 2: A Robust Debut

The Nintendo Switch 2, which launched in June 2025, has sold 17.37 million units globally by December 31, 2025.

During the three months ending December 31, 2025, the console sold 7.01 million units. This represents its strongest sales quarter since launch, exceeding its Q1 launch sales of 5.82 million units.

The Switch 2's sales performance has surpassed that of the original Nintendo Switch during a comparable launch timeframe. The original Switch sold 14.86 million units in the first nine months of Nintendo's 2018 financial year following its March 2017 release.

Sales of the Switch 2 in Japan reportedly exceeded expectations. This was driven by holiday sales of titles such as Pokémon Legends: Z-A – Nintendo Switch 2 Edition and Kirby Air Riders.

Original Switch Performance Wanes

Sales of the original Nintendo Switch for the nine months ending December 31, 2025, totaled 3.25 million consoles, marking a 66% decrease year-on-year.

• Its cumulative sales reached 155.37 million units.
• 129 million people used the hardware between January and December 2025, a slight decrease from 130 million in 2024.
• Original Nintendo Switch software sales were 108.93 million units, a 12.1% decrease year-on-year.

Software Sales Overview

Nintendo Switch 2 software sales totaled 37.93 million units. During the three months ending December 31, 2025, Switch 2 software sales were 17.31 million games.

Physical game sales constituted 58.7% of all Nintendo games sold during Q3.

Updated sales figures for specific Nintendo Switch 2 titles include:

• Mario Kart World: 14 million copies
• Donkey Kong Bananza: 4.25 million units
• Pokémon Legends Z-A (Switch 2 version): 3.89 million units
• Kirby Air Riders: 1.76 million units

Semiconductor Shortage Looms as Key Challenge

Nintendo acknowledged challenges arising from a global shortage of memory chips, a key component in its gaming consoles, which is contributing to increased prices.

Nintendo President Shuntaro Furukawa stated that while memory price increases are occurring faster than expected, they did not significantly impact hardware profitability in the third quarter and are not anticipated to affect Q4 results.

Furukawa indicated that if these price increases are sustained longer than expected or continue into the next fiscal year and beyond, they could potentially pressure future profitability.

Nintendo is actively working to secure stable supplies of memory components. The company has not made a decision regarding future price adjustments for Switch 2 hardware. Furukawa stated that any such decision would consider factors including profitability, the platform's installed base, sales trends, and the overall market environment. He emphasized a focus on "profitability on a global basis" and cost reduction through mass production of console hardware, traditionally aiming to avoid situations where individual units are sold at a loss.

Industry projections from TrendForce indicated that contract prices for conventional dynamic random access memory (DRAM) chips were expected to increase by 90% to 95% in the first quarter of the year compared to the prior three months. A semiconductor industry CEO projected the memory chip shortage could continue through 2027.

This shortage has already impacted competitors, with Valve recently experiencing a delay in its new hardware launch attributed to ongoing memory and storage shortages.

Outlook: Sustaining Momentum

Nintendo maintained its full-year Switch 2 sales forecast.

Upcoming game releases for the Switch 2 include "Mario Tennis Fever" in February and "Pokémon Pokopia" in March. "The Super Mario Galaxy Movie" is scheduled for an April release.

Nintendo is also focusing on large-scale updates for popular original Switch titles, including Animal Crossing: New Horizons and Splatoon 3. These updates aim to maintain consumer engagement and encourage a transition to the Switch 2 when new titles are released.

President Furukawa highlighted the importance of the second and third years for the Nintendo Switch 2 in expanding its installed base, stating that this could significantly boost software sales.