May 12—Nintendo is still dealing with switch component sourcing problems due to COVID-19, reports Bloomberg. The coronavirus pandemic has caused parts procurement issues throughout the global supply chain for months now. The company’s production issues are hitting as consumers have driven up demand for its flagship console.
Nintendo Switch Part Shortages
Although Nintendo mainly relies on Chinese corporation Foxconn to assemble its Switches, the firm sources key components from Southeast Asia. Unfortunately, the region is still operating under widespread government lockdowns that have affected parts production and delivery. As a result, the gaming giant may miss its target of producing 19 million consoles in the 2021 fiscal year.
Currently, Nintendo sources its printed circuit boards (PCBs) from Malaysia, which instituted manufacturing and travel restrictions to halt the spread of the coronavirus pandemic. On May 4, the Southeast Asian nation relaxed its lockdown to revive its economy and to allow families to gather for Eid al-Fitr celebrations. However, Kuala Lumpur is still keeping the country’s border sealed to prevent a spike in COVID-19 cases.
Similarly, Nintendo procures passive components it embeds on its PCBs from the Philippines, which is also under local lockdown. That said, a spokesman for President Rodrigo Duarte noted the leader is considering easing manufacturing restrictions beginning on May 16.
During a recent earnings call, Nintendo President Shuntaro Furukawa said he expects the firm’s COVID-19 related production issues to end by summer. However, the company is facing other production issues beyond PCB and passive component shortages.
Nintendo’s Other Recent Headaches
Nintendo’s Switch supply issues actually stretch back to February. That month, the corporation informed its Japanese retail partners that console and accessory availability would be limited because of the coronavirus outbreak’s impact on its manufacturing capacity. Besides, the company reportedly encountered DRAM shortages and production delays in March.
As the disease reached pandemic proportions, the corporation has seen an upswing in demand for its flagship console. Homebound gamers have sought to relieve their isolation related anxiety by playing their favorite titles online. Though Microsoft, Sony, and Valve have seen increased use of their platforms, Switch usage exploded with the March release of “Animal Crossing: New Horizons.”
The game lets players chat and interact with their friends and family, so “New Horizons” has become a socialization hub. Consequently, Nintendo sold 3.29 million Switches last quarter while consumers have purchased 11.77 million copies of the latest iteration of “Animal Crossing.” Unfortunately, COVID-19 is preventing the gaming institution from capitalizing on newfound demand for its products.
In addition, the corporation announced it suffered a significant data breach in late April. Hackers subverted the firm cybersecurity and accessed login credentials belonging to over 160,000 people. Earlier this month, malicious operators leaked detailed technical specifications for its Wii and Nintendo 64 consoles. Although the hacks do not directly affect the firm’s manufacturing efforts, they undoubtedly consumed energy and resources at a time when both are in short supply.
Hopefully, Nintendo’s prediction of a near-term return to normalcy will be realized.