- Nintendo is seeing a strong demand for its Switch console
- It competes against Apple in acquiring parts
- To secure parts, Nintendo may have to increase spending
Nintendo is said to be squaring off with companies like Apple as they “gobble” up parts that Nintendo needs to manufacture its Switch console.
Nintendo has reportedly told suppliers and assemblers that it hopes to ship 20 million Switch consoles by the year ending March 2018 according to a report by The Wall Street Journal. This is almost double the number that the company had modestly stated in its official sales target.
But Nintendo believes that the strong demand for Switch so far will help the company reach the 20 million mark, if it gets the parts that is. Nintendo managed to sell 2.7 million units of Switch in March alone following its worldwide debut. But the company is facing a problem of capacity shortage for components used in smartphones, computer servers and other digital devices – a problem faced by many smartphone makers. Components like the NAND flash-memory chips that store data, liquid-crystal displays and tiny motors called Linear Resonant Actuators that enable the Switch’s hand-held controllers to give a rustling feel are in short supply.
NAND chips, in particular, see a huge demand and not enough supply, according to a Toshiba spokesperson who cited Apple and some Chinese companies among its partners. Apple, of course, has reported a strong demand for the iPhone 7 and is expected to meet the same till the end of the year as it readies to launch its next iPhone in September. The demand for the iPhone is keeping parts makers at full capacity and this doesn’t bode well for Nintendo.
Analysts also say that smartphone makers like Apple will tend to get the edge when it comes to parts as they issue larger orders than Nintendo. The flip side is that if Nintendo were to increase its spending to secure the parts it needs, it may well have to increase the production cost over its $299 (roughly Rs. 19,300) retail price, and President Tatsumi Kimishima has stated that he doesn’t wish to sell the Switch at a loss.
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