Nintendo faces an unlikely competitor in Apple over hardware parts to keep manufacturing the Nintendo Switch, which Nintendo reportedly wants to produce more of if it can manage to overcome compontent shortages. Otherwise, Nintendo might not be able meet the increased demand for the Switch this year.
Nintendo recently suggested that the company is looking to increase its console sales from 10 million by the end of its financial year in March 2018, to 20 million. Double Nintendo's original sales plan. To do so, Nintendo is aggressively pushing forward with manufacturing the Nintendo Switch. But according to The Wall Street Journal, hardware companies like Apple might leave Nintendo scrambling to get the necessary parts, thanks to an industrywide shortage for hardware components used in both the Switch and popular smartphones.
These components like the NAND flash-memory chips for data storage, liquid-crystal displays, and the tiny motors that are integral to the Switch's "HD Rumble" feature, are all in-demand from Nintendo, Apple, and various other device firms in China.
"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," said a Toshiba Corp. spokeswoman to the Wall Street Journal. Part of the reason for the supply crunch is that the NAND flash memory is needed for not only the Switch, but also the iPhone 7, and the new iPhone releasing this fall.
Whether or not Nintendo foresaw clashing with some of the world's leading smartphone makers for hardware parts isn't exactly clear. But as the report reveals, smartphone makers are better positioned to bid for the same components Nintendo needs for the Switch with smartphone makers typically placing much larger orders for parts than Nintendo.
Some analysts believe that Nintendo might have to increase spending if the company wants to secure enough parts for an increased production drive. However, according to the Tech Times, Nintendo manufactures the Switch at $257, not that much less than the $299.99 market price for the console. As previously reported, Nintendo President Tatsumi Kimishima isn't keen on selling the Switch at a loss, and increasing expenditures on the Switch's manufacturing will definitely cut into the profit margins made off each console.
The Nintendo Switch is proving to be a boon for the Japanese company, becoming Nintendo's fastest selling console. Additionally, big game releases like the recent announcement that Capcom's Monster Hunter XX will be coming to the Switch helped drive Nintendo stock to its highest price in eight-and-a-half years.
In a way, Nintendo facing off against mobile giants is indicative of how many consumers view the console. Despite having the ability to switch between home and mobile console play, the fact that Nintendo is up against the likes of Apple for the same manufacturing parts speaks in some way to how the Switch, in design and usage, feels closer to that of a smartphone than a traditional home console. It will be interesting in the next several years to see where Nintendo takes this mobile design, given the interesting success of the Switch.