I don't think 500MB/s is a big ask for internal storage, even if Nintendo choose literally the cheapest parts available. I think removable storage is where the problem will be.
For context on the internal storage, the Samsung KLMCG4JETD eMMC module used in the OLED model
can hit 330MB/s sequential reads, and Nintendo clearly didn't purchase it for the speed, as Switch games can't even leverage speeds close to that as far as I'm aware. It would seem that that's the baseline of what was available last year, and it's quite possible that by the time Nintendo's next device releases the cheapest part they can get would hit 500MB/s.
I don't even think the game cards will be an issue. Not because they'll hit 500MB/s (while probably theoretically possible, it would be far too expensive), but because mandatory installs are inevitable. Sony and MS have already passed an entire generation of mandatory installs, and enough third party Switch games have mandatory downloads by this stage that they may as well move to mandatory installs for games that need faster storage speeds.
The issue is the removable storage. The market is still stuck on the achingly slow UHS-I SD card standard, and I don't think Nintendo are going to be willing to break from the market standard. I won't bore people with my usual rant on this subject, and I do think UFS cards would be a sensible choice for removable storage, giving a 550MB/s baseline and good power efficiency, but I just don't think Nintendo are going to rock the boat on this one. It's not even really a cost thing, as I doubt a UFS card slot (or even a CFExpress slot) would be much more expensive than a basic microSD slot, but more that they'll overestimate the benefit of supporting readily-available microSD cards and underestimate their ability to kick-start an alternative.
I am, at least, glad to hear that brainchild is reporting this in feedback to Nintendo, and I hope other developers do too. However, I'm concerned that most of the design of the new device will be based on feedback gathered pre-2021, and I don't think storage bandwidth was a major concern for third parties trying to port PS4 or XBO games, they were probably commenting a lot more on CPU performance, memory bandwidth, etc. I also don't think Nintendo's own studios would have encountered it as a major bottleneck, at least not to the point of requesting a baseline 20x higher than the base Switch game card read speed of 25MB/s.
I'm sure as development moves to PS5 and XBS exclusives, storage speeds will become one of the major bottlenecks, but I feel like Nintendo will be more focussed on correcting the limitations of the Switch versus trying to actually future proof. My one hope is that UE5 itself would be a catalyst for them to look at their storage options and try to find something which gives them a baseline level of support for the engine's main features.