It seems that Nintendo is unable to meet its desired production targets due to the global semiconductor shortage.
In a press conference, following the publication of the company’s latest earnings result, Nintendo president Shuntaro Furukawa admitted to Nikkei (via VGC) that, “Due to the global shortage of semiconductor materials, we are not able to produce all the products we want to. We are doing everything we can, but there is an increasing sense of uncertainty about production plans. Our earnings forecast is based on the assumption that we will be able to secure parts and materials, and if the situation changes, we would like to respond by revising it.”
The shortage has wreaked havoc in a number of areas including the automobile, aviation, hardware, and video game industries. A number of factors have resulted in major manufacturers unable to keep up with the demand for semiconductors, causing various industries to slow down production.
The US trade embargoes on China resulted in various smartphone manufacturers stockpiling resources; that, in addition with the Covid-19 induced lockdowns, has severely impacted the production of these semiconductors. Taiwan Semiconductor Manufacturing Co., along with other manufacturing giants like Continental AG, Renesas Electronics Corp., and Foxconn Technology Group has warned that the shortage may last till 2023.
Furukawa earlier stated that while the company managed to secure enough semiconductors for immediate Switch production, the global shortage and strong demand was likely to catch up.
The console’s sales forecast is over three million units lower than that of last year, but Furukawa explained that it’s likely due to the phenomenal performance of Animal Crossing: New Horizons. “We need to take into account the impact of the explosive success of Animal Crossing: New Horizons, which drove hardware sales in the previous fiscal year,” he said. “However, the forecast of 25.5 million units at the beginning of the fiscal year is a very high figure compared to the past.”
The game sold more than 20 million copies during the last fiscal year, making up for almost 10% of all Switch games sold.
Last week, we reported that Nintendo had asked its manufacturing partners to ramp up production of the Switch to 30 million units for the financial year ending March 31, 2022. This marks the highest ever production level for the handheld, despite being in its fifth year since launch. According to reports, this was linked to the anticipated announcement of the Switch Pro; however, Nintendo refused to comment.