Nintendo Co Ltd will reduce manufacturing of its Switch 2 console following year-end sales that fell below the company’s internal expectations, with the shortfall most pronounced in the U.S., Bloomberg reported.
The company now intends to produce 4 million Switch 2 units in the current quarter, down from an original plan of 6 million units. The cut in output is expected to extend into April, according to the report.
Market reaction was evident: Nintendo’s shares dropped 2% after the report, underperforming the Nikkei 225 index, which rose 0.5%.
The Switch 2 enjoyed a strong launch in early 2025, moving more than 3.5 million units in its first four days on the market. By the start of 2026, cumulative sales of the platform were roughly 18 million units.
Despite the brisk debut, questions emerged about whether Nintendo could keep up that initial momentum. One area of concern cited was the console’s library of exclusives, with some observers noting doubts over whether the software pipeline would sustain hardware demand.
The release of Pokemon: Pokopia provided a notable boost to software sales, with the title selling 2 million copies in under a week and being described in the report as a sleeper hit.
Beyond demand-side considerations, Nintendo faces cost pressures from rising global memory prices. The report links the memory-price increase to strong demand from the artificial intelligence industry, which has tightened supplies and pushed up costs for components widely used in consumer electronics.
Slower consumer spending on discretionary items also presents a potential headwind for Switch 2 sales, the report said, as uncertainty around slowing global economic growth may dampen purchases of non-essential goods.
Summary of the core facts presented in this report:
- Nintendo will scale back Switch 2 production to 4 million units this quarter from a planned 6 million units.
- The reduced output rate will continue into April.
- The Switch 2 sold over 3.5 million units in its first four days and had sold about 18 million units by the start of 2026.
- Pokemon: Pokopia sold 2 million copies in less than a week and helped offset some sales concerns.
- Rising global memory prices tied to AI demand and weaker discretionary consumer spending are cited as additional pressures.