Sunday, September 19th, 2021

Nintendo Switch production is struggling to meet demand


©Nintendo Life

Although this is not a particularly attractive topic and has not received the attention it deserves, there is a manufacturing crisis that has swept the technology industry, including video games. The dilemma of Sony and Microsoft trying to produce a sufficient number of new game consoles to meet demand has been widely reported, but even with mature products such as Switch, the problem is beginning to be solved.

The basic summary is that due to the lack of manufactured products at present, the number of various semiconductors is insufficient. Due to the slow inventory launch of PlayStation 5 and Xbox Series X/S, Nintendo may be able to achieve this goal in the past year due to its established processes and technologies in the Switch, thereby achieving excellent hardware sales. However, Nintendo’s recent financial results have mentioned persistent problems, and the company stated that its sales estimates are based on successfully obtaining all the materials needed for its production.

However, the company’s president Juntaro Furukawa explained this in more detail in the investor’s question and answer Formal translation. Here is what he said:

In terms of production, we achieved stable hardware production at the end of the last calendar year. Therefore, in the last fiscal year, we set a record for the highest sales volume in the fourth quarter. At the same time, even after the beginning of this calendar year, the demand for hardware still exceeds our expectations, and due to the tight global supply and demand of semiconductor materials, the current output has not caught up with this high demand. Although we are currently working hard to produce as many equipment as possible, the fact is that our production plan is more uncertain than at the beginning of the last fiscal year. The premise of our annual sales plan is that we can ensure the production of the required materials, but if we can produce more products, we will strive to meet the strong demand and be able to transport and sell these products. unit.

This is to say that Furukawa has thoroughly confirmed this moment that the output has not caught up with the current high demand. Another factor that hurts supply and inventory, especially in Europe, is the recent blockage of the Suez Canal transport route, which has put pressure on already tight profits. Of course, there is also the impact of a global pandemic.

Regarding the current state of Nintendo Switch hardware, there are no major differences between regions, and overall demand remains strong. However, COVID-19 has caused a reduction and delays in shipments in markets outside Japan, and retailers in certain regions have temporarily experienced shortages. In particular, the obstruction of the Suez Canal caused delays in the shipment of products to Europe and tight retail inventories in certain countries. In the United States, sales were strong in March, and hardware supplies are currently unable to keep up with strong demand.

All this means that, depending on the region, Switch hardware inventory may be in short supply. This did happen sometimes last year, so this is not unprecedented, and there is no doubt that Nintendo will do everything it can to meet the demand.

The fact that demand is so high is certainly a positive sign. Nintendo Switch has been on the market for more than four years, and it is still performing strongly.