Though it’s not a particularly glamorous topic and isn’t talked about as much as it should be, there is currently a manufacturing crisis engulfing aspects of the technology industry, including video games. The woes of Sony and Microsoft in trying to produce enough new consoles to meet demand have been widely reported, yet even with established products like the Switch the issues are starting to bite.
The basic summary is that semiconductors of various kinds aren’t available in enough volume, as there is currently a fundamental shortage of manufacturing supplies. Nintendo, perhaps due to its established processes and technology in the Switch, was able to ride this out to achieve outstanding hardware sales over the past year as stock of PlayStation 5 and Xbox Series X/S were slow to roll out. However, the ongoing issues were cited in Nintendo’s most recent financial results, with the company stating that its sales estimates were based on successfully acquiring all of the materials it needs for production.
However, company President Shuntaro Furukawa addressed this in more detail in the investor Q & A, which has now been officially translated. Below is what he said:
As for production, we achieved steady hardware production through the end of last calendar year, and as a result, in the previous fiscal year we set a record for our highest fourth-quarter sales volume. Meanwhile, demand for hardware continues to exceed our expectations even after the beginning of this calendar year, and production has currently not caught up to this high demand due to the tight supply and demand situation for semiconductor materials worldwide. Although we are currently striving to produce as many units as possible, the fact is that our production plans are more uncertain than they were at the beginning of previous fiscal years. Our full-year sales plan is based on the premise that we can secure the materials necessary for production, but if we are able to produce more units, we will work hard to meet the strong demand, and to be able to ship and sell those units.
It’s rather telling that Furukawa has outright confirmed that, at this moment, production has not caught up to current high demand. Another factor that harmed supplies and stock, particularly in Europe, was the recent blockage of the Suez Canal shipping route, which added strain to already tight margins. There is also, of course, the impact of the global pandemic.
Regarding the current situation for Nintendo Switch hardware, there are no major differences between regions, and demand remains strong overall. However, COVID-19 has caused declines and delays in freight traffic in markets outside of Japan, and retailers in some regions are experiencing temporary shortages. In particular, the accident that blocked the Suez Canal caused delays in the transportation of products bound for Europe, and retail inventories are tight in some countries. In the United States, sales were strong in March, and the supply of hardware is currently not keeping up with the strong demand.
What this all means is that it seems likely, to varying degrees depending on territory, that there could be some shortages of Switch hardware stock. This did happen at times last year as well, so it’s not unprecedented, and no doubt Nintendo will do everything in its power to meet demand.
The fact demand remains so high is a positive sign, of course; the Nintendo Switch is still going strong after over four years on the market.