Nintendo Switch has proven to be immensely successful for Nintendo that the company has increased the production of the console to 18 million by the end of the current fiscal year. However, it seems that Nintendo might not be able to produce such quantity as the demand for the console has increased and Nintendo is battling for parts to produce the console.
According to the report from WSJ, Nintendo has told “suppliers and assemblers” that the company intends to produce nearly 20 million units of Nintendo Switch. According to the report, there is an industrywide shortage of components used in “smartphones, computer servers and other digital devices”.
The main components that are short are the NAND Flash Memory chips for data storage, LCD displays, and “tiny motors that enable the Switch’s hand-held controllers to imitate the feel of an ice cube shaking in a glass”.
According to Toshiba, “Demand for our NAND flash memory has been overwhelmingly greater than supply, and the situation is likely to stay for the rest of this year”. According to the company, the shortage is due to demand from smartphone makers such as Apple and other Chinese mobile companies.
People in the industry say the rapid expansion of web-based services for corporations has driven demand for computer servers that use flash memory. Continued demand for Apple’s iPhone 7 and a 10th anniversary model of the iPhone expected later this year are also keeping parts makers at full capacity, helping power Japan’s economy to its longest growth streak since 2006.
This situation could also lead to increased production cost of Nintendo Switch if Nintendo increases spending significantly to secure more parts.
According to analysts, the companies looking for these parts “can often offer better terms than Nintendo. Makers of data-center servers tend to use newer and higher-margin components, while smartphone makers issue larger orders than Nintendo”.
Source: NeoGaf
