The Switch 2 is launching in early June amid ongoing drama and uncertainty about tariffs, and now Nintendo has put a dollar amount to how much of a negative impact it's forecasting as a result.
Speaking to analysts and investors as part of the company's latest earnings briefing, Nintendo president Shuntaro Furukawa said Nintendo has factored in a negative impact of "several tens of billions of yen at the profit level." Ten billion yen equals about $67 million, so it's not a small amount.
Furukawa said Nintendo is basing this off the US tariff rates effective April 10. It's now mid-May, and things have developed since then. Just recently, the US and China reached an agreement that sees the US drop its previous 145% tariff rate on China down to 30%, with China lowering its rate on the US from 125% to 10%. This deal is set to last for 90 days, which would take it beyond the Switch 2 release date.
Given Nintendo's forecast was based on what the tariff rate was on April 10, there might be different calculations going on at Nintendo now that tariffs on goods from China have been lowered massively. This has been a fluid situation for Nintendo and many other companies bringing in goods to the US from China (Switch 2 consoles are manufactured in China, Vietnam, and Cambodia).
Furukawa made these comments during Nintendo's latest earnings briefing on May 8, and the English translation was not posted until today, May 13. The US and China announced their joint trade deal on May 12.
Furukawa went on to say that the Switch 2 is expected to have a lower profit margin that the original Switch, which has been on sale since 2017.
"Our basic policy is that for any country or region, if tariffs are imposed, we recognize them as a part of the cost and incorporate them into the price. However, this year marks our first new dedicated video game system launch in eight years, so given our unique situation, our priority is to maintain the momentum of our platforms, which is extremely important for our dedicated video game platform business, and to rapidly expand the install base of our new hardware," Furukawa said.
The executive added that if there are further changes to tariff policies for China and other markets, Nintendo would consider "what kind of price adjustments would be appropriate," if any.
For context, Nintendo is projecting 320 billion yen in operating profit and 380 billion yen in ordinary profit for the fiscal year ending March 31, 2026, along with 300 billion yen in profit attributable to owners of parent.
For the fiscal year that ended March 31, 2024, Nintendo made an operating profit of 528.9 billion yen, an ordinary profit of 680.5 billion yen, and 490.6 billion yen in profit attributable to owners of parent. For the fiscal year that ended March 31, 2025, Nintendo made an operating profit of 282.5 billion yen, an ordinary profit of 372.3 billion yen, and 278.8 billion in profit attributable to owners of parent.
Nintendo is expecting to sell 15 million Switch 2 units during the current fiscal year that ends March 31, 2026, and that's about the same as the original Switch over its first 10 months in the market. Furukawa said the Switch 2's "relatively high" price compared to the original Switch--it's $50 more expensive with inflation factored in--represents one of the "challenges to early adoption" of the system.
"The limits of our hardware production capacity were not a factor in setting our sales volume forecast. Additionally, the tariff situation in the U.S. or a possibility of a recession did not affect our sales volume forecast either," Furukawa said.
Nintendo held its big Switch 2 Direct on April 2, the same day that US President Donald Trump announced his "Liberation Day" tariffs on China. Responding to this, Nintendo announced that Switch 2 preorders would not begin on April 9, but were instead delayed to later in the month, with many wondering if Nintendo would raise the price of the console as a result. That did not happen, but the company did raise prices on some Switch 2 accessories.
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Speaking to analysts and investors as part of the company's latest earnings briefing, Nintendo president Shuntaro Furukawa said Nintendo has factored in a negative impact of "several tens of billions of yen at the profit level." Ten billion yen equals about $67 million, so it's not a small amount.
Furukawa said Nintendo is basing this off the US tariff rates effective April 10. It's now mid-May, and things have developed since then. Just recently, the US and China reached an agreement that sees the US drop its previous 145% tariff rate on China down to 30%, with China lowering its rate on the US from 125% to 10%. This deal is set to last for 90 days, which would take it beyond the Switch 2 release date.
Given Nintendo's forecast was based on what the tariff rate was on April 10, there might be different calculations going on at Nintendo now that tariffs on goods from China have been lowered massively. This has been a fluid situation for Nintendo and many other companies bringing in goods to the US from China (Switch 2 consoles are manufactured in China, Vietnam, and Cambodia).
Furukawa made these comments during Nintendo's latest earnings briefing on May 8, and the English translation was not posted until today, May 13. The US and China announced their joint trade deal on May 12.
Furukawa went on to say that the Switch 2 is expected to have a lower profit margin that the original Switch, which has been on sale since 2017.
"Our basic policy is that for any country or region, if tariffs are imposed, we recognize them as a part of the cost and incorporate them into the price. However, this year marks our first new dedicated video game system launch in eight years, so given our unique situation, our priority is to maintain the momentum of our platforms, which is extremely important for our dedicated video game platform business, and to rapidly expand the install base of our new hardware," Furukawa said.
The executive added that if there are further changes to tariff policies for China and other markets, Nintendo would consider "what kind of price adjustments would be appropriate," if any.
For context, Nintendo is projecting 320 billion yen in operating profit and 380 billion yen in ordinary profit for the fiscal year ending March 31, 2026, along with 300 billion yen in profit attributable to owners of parent.
For the fiscal year that ended March 31, 2024, Nintendo made an operating profit of 528.9 billion yen, an ordinary profit of 680.5 billion yen, and 490.6 billion yen in profit attributable to owners of parent. For the fiscal year that ended March 31, 2025, Nintendo made an operating profit of 282.5 billion yen, an ordinary profit of 372.3 billion yen, and 278.8 billion in profit attributable to owners of parent.
Nintendo is expecting to sell 15 million Switch 2 units during the current fiscal year that ends March 31, 2026, and that's about the same as the original Switch over its first 10 months in the market. Furukawa said the Switch 2's "relatively high" price compared to the original Switch--it's $50 more expensive with inflation factored in--represents one of the "challenges to early adoption" of the system.
"The limits of our hardware production capacity were not a factor in setting our sales volume forecast. Additionally, the tariff situation in the U.S. or a possibility of a recession did not affect our sales volume forecast either," Furukawa said.
Nintendo held its big Switch 2 Direct on April 2, the same day that US President Donald Trump announced his "Liberation Day" tariffs on China. Responding to this, Nintendo announced that Switch 2 preorders would not begin on April 9, but were instead delayed to later in the month, with many wondering if Nintendo would raise the price of the console as a result. That did not happen, but the company did raise prices on some Switch 2 accessories.
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