It might be difficult to imagine that increased sales of Nintendo's latest hybrid console, the Nintendo Switch 2, in any region, let alone its home base of Japan, would actually hurt the console's profitability. But that's exactly what's happening, according to Nintendo president Shuntaro Furukawa. In the company's official translation of its Q&A section from its third-quarter financial report, Furukawa confirmed that the "better-than-projected" sales of the Nintendo Switch 2 in Japan will negatively impact the Switch 2's operating and gross profit.
How is that the case? Because the parts Nintendo uses to manufacture the Nintendo Switch 2 are purchased in U.S. dollars. So when players in Japan purchase a Switch 2 with Japanese Yen, a currency that is currently in a downward trend, Nintendo still ends up losing money.
During the Q&A section, an investor asked Furukawa, "Considering that most procurement costs are in U.S. dollars, do I understand correctly that profitability is declining due to the continuing depreciation of the Yen?" They also asked if Furukawa could explain why Switch 2 sales in Japan are doing as well as they are, and the answer, according to Furukawa, lies with Pokémon Legends Z-A and Kirby Air Riders.
"Hardware-related procurement purchases are primarily made in U.S. dollars, so given the current exchange rate environment, the better-than-projected hardware sales in Japan will have a downward effect on gross profit and operating profit," Furukawa responded.
"The backdrop of hardware sales in Japan trending better than our expectations was the release of Pokémon Legends Z-A - Nintendo Switch 2 Edition and Kirby Air Riders during the holiday season, building on the initial momentum of Nintendo Switch 2 hardware. We believe that users in Japan saw these titles as an opportunity to transition to Nintendo Switch 2 at a relatively higher rate compared to Nintendo Switch owners outside of Japan."
This interesting tidbit appeared amidst Furukawa having to answer a flurry of questions about the memory shortage that is currently impacting the entire tech industry, and how Nintendo is planning to accommodate it. It's no surprise that investors only really wanted to talk about the memory shortage, especially after Nintendo lost $14 billion in share value towards the end of last year, directly due to memory shortage fears.
For now, Furukawa doesn't want to be "overly influenced" by something that could turn out to be a short-term trend, though with recent reports that memory suppliers are taking "zero" chances of being shortchanged, Furukawa and Nintendo may end up having to increase the price of the Nintendo Switch 2.
For now, that's only one possible outcome, not an inevitability. In the meantime, the Switch 2 is still selling like gangbusters outside of Japan as well, as the console sold 17.37 million units in 2025.
About the author: David has been writing about videogames, technology, and culture since 2020, with a focus on reporting daily news across multiple publications, including GameDaily.Biz, GameSkinny, and PlayStation Universe before joining Wccftech in 2025. David started contributing as Canada/US reporter for Wccftech's gaming section in 2025. Besides being up-to-date on the industry's movements, he loves interviewing developers, reviewing games, and writing intricate essays about the symbolism and layered meanings to be found in rich narratives as he's done for publications like GamesIndustry.Biz, LostInCult, and others. Outside of games he loves movies, music, theatre, his hometown, and his family, though not necessarily in that order.
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