Nintendo to cut Switch game console target 20% on chip shortage: Nikkei

TOKYO (BLOOMBERG, REUTERS) - Nintendo plans to produce about 24 million Switch consoles for the current fiscal year, about 20 per cent less than originally planned, the Nikkei reported.

While demand for the new console is strong, the Kyoto-based company has struggled to get enough semiconductors to make the machines, the newspaper said. The company had originally planned to make about 30 million consoles, a record high, it said.

The new Switch got off to a rocky start last month during its debut, suggesting supply constraints were hampering the company's biggest product launch in years, Bloomberg News reported.

The US$350 (S$472) Oled edition sold 138,409 units in the domestic market over its launch weekend, sales tracker Famitsu said, compared with the original Switch's inaugural weekend sales of 330,637 in 2017.

A company spokesman confirmed the chip shortage is affecting production. He declined to comment on the reported 24 million figure and said the company is assessing the magnitude of the impact now.

But on Thursday (Nov 4), Nintendo cut its full year Switch sales forecast by 6 per cent to 24 million units and said it would struggle to meet demand in the key year-end shopping season as chip shortages disrupt production of the hit device, which is in its fifth year on the market.

"We can't produce enough to meet the demand we are expecting during the upcoming holiday season," Nintendo President Shuntaro Furukawa told a news briefing.

"Currently there is no sign of improvement and the situation continues to be severe so I can't say how long it will continue," Mr Furukawa said.

Then on Friday, Nintendo said that the global chip shortage is also hitting hardware development.

"The semiconductor situation is having some effect on hardware development," Nintendo executive Ko Shiota, who heads the development team, told an analyst briefing.

"We are looking at substituting components and tweaking designs to try and reduce the impact," he added.

The firm is heavily reliant on its console business at a time when deep-pocketed rivals such as Microsoft are expanding subscription and cloud gaming services.

Sales of the Switch device slumped to 8.28 million units in the six months to end September, compared to 12.53 million in the same period a year earlier.

Nintendo said in May it was targeting sales of 25.5 million consoles in the year ending March 2022, having sold 28.8 million units in the prior period. Management had hoped to exceed that figure, Bloomberg News reported at the time.

The new model sports a more vibrant 7-inch Oled display along with a new flexible stand, more storage space and better speakers as well as an Internet cable port.

Nintendo's own flagship store in the Shibuya district of Tokyo implemented a lottery to determine who gets to buy the device.

Nintendo shares have dropped 24 per cent this year amid concerns over the new Switch.

On Friday, it declined to comment on plans for next-generation hardware but refers to an "integrated hardware-software next gaming system" in company slides.

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