Is It 1988? Chip Shortage Could Hamstring Switch Production
When Nintendo announced its fiscal year forecasts of selling 10 million Nintendo Switch systems, many industry analysts immediately thought they were lowballing that number. Was Nintendo simply being ultra conservative in their estimates, or was there something else to blame?
According to the Wall Street Journal, Nintendo would love to produce more Nintendo Switch consoles. In fact, it wanted to make nearly 20 million units for the year ending March 2018, but apparently there’s a snag in production.
“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 spokeswoman at Toshiba Corp., the troubled industrial giant that is leaning on flash memory to survive. She cited demand from smartphone makers—Apple and Chinese companies are among Toshiba’s customers—and data centers.
With the upcoming iPhone 7 and 10th anniversary iPhone supposedly releasing later this fall, it appears that Apple might have bought up some of the necessary parts Nintendo needs to build its Switch. These parts are often ordered months in advance, so Nintendo can’t just snap its fingers and expect more to show up in their supply chain. Of course there’s always the possibility it could shop around for the parts it needs, but that often results in higher costs and we know that Nintendo doesn’t want to sell the Switch at a loss.
Nintendo, and indeed the entire electronics industry, found itself in a similar predicament back in 1988 and 1989 when there was a microchip shortage. Simply put, there weren’t enough of the small chips to go around, and with Nintendo selling millions upon millions of carts, adequate supply wasn’t in place for the holiday season of 1988. This caused huge shortages of popular games like Super Mario Bros. 2 and Zelda II: The Adventure of Link. Time will tell if this all plays out similarly, with worldwide shortages of Switches, or if Nintendo can come up with a solution and increase supply.
[Source: Wall Street Journal]
Craig has been covering the video game industry since 1995. His work has been published across a wide spectrum of media sites. He’s currently the Editor-In-Chief of Nintendo Times and contributes to Gaming Age.