Nintendo added Sharp Corp as a controller to the Switch console, according to people directly involved in the matter, as it stabilizes production and hedge trade tensions between the US and China.
The video game giant struggled to produce enough units for most of this year, as the hit game Animal Crossing: New Horizons and consumers stuck at home increased demand. While the coronavirus outbreak hurt production early on, Nintendo President Shuntaro Furukawa said this month that production has returned to normal and the Switch is now manufactured in Malaysia, in addition to current China and Vietnam locations.
People who asked not to be identified because the information is not public said the plant in Malaysia is owned by Sharp. They added that Foxconn Technology, Nintendo’s main assembly partner, a major unit of Foxconn Technology Group, owns Sharp’s stake and helped connect the two Japanese companies. Sharp continues to operate separately from its Taiwanese owner and its shares will be added to the average 225-issue Nikkei index next week after a four-year absence.
Nintendo asked Foxconn Tech during the Trump era to provide alternative manufacturing sites outside of China to hedge the trade war, according to one person, and the company ended up directing some Switch orders to Sharp as the company has additional capacity in Malaysia. The person said production volumes at the Southeast Asia site are limited.
Nintendo’s Furukawa said that these assembly lines are not yet fully functional and that the first batch of them is about to hit store shelves soon.
A Sharp representative declined to comment, while a Nintendo spokesperson refused to confirm any details other than the president’s previous public comments.
Key assembly companies plan to operate at full capacity until the end of this year, avoiding the typical December lull that follows the holiday demand. This indicates that Nintendo, in the current quarter, may end up shipping the more than 10.8 million Switch units it managed in the October-December period of last year.
Nintendo has been diversifying its supply chain since before the COVID-19 era, and its boss said at this month’s press conference that adding Malaysia was part of the effort. Osaka-based Sharp has a history of working with Nintendo, having assembled the Famicom console and later introducing the main components of the handheld 3DS. Foxconn Tech in China continues to handle the bulk of Switch production.
Switch sales momentum continued in October, according to the Nintendo chief, and the much anticipated debut of new consoles from Sony Corp. And Microsoft Corp in November by very limited supplies on launch day. Nintendo is expected to raise its fiscal year sales target from the current 24 million when it announces the next quarterly results, as David Gibson, chief investment advisor at Astris Advisory Japan, expects total sales of 26.4 million for the period ending March 31.
Released in 2017, Switch has sold 68.3 million units as of September 30th and its lifetime sales are on track to exceed 100 million units. The company has expressed confidence in the enhanced gaming lineup it has in store for 2021. Bloomberg News also reports that Nintendo is planning to review updated hardware, likely with support for 4K graphics, to help extend the Switch’s life cycle.
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