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Nintendo Co has added Sharp Corp as an assembler for its Switch console, according to people directly involved in the matter, as it works to stabilize production and guard against trade tensions between the United States and China.
The video game giant has struggled to produce enough units for most of this year as the hit game. Animal Crossing: New Horizons and consumers stuck at home drove demand. While the coronavirus outbreak affected production early on, Nintendo President Shuntaro Furukawa said this month that production has returned to normal and that the Switch is now manufactured in Malaysia, in addition to existing locations in China and Vietnam.
That Malaysian factory is owned by Sharp, said the people, who asked not to be identified because the information is not public. Nintendo’s main assembly partner, Foxconn Technology Co, a key unit of Foxconn Technology Group, owns a stake in Sharp and helped connect the two Japanese companies, they added. Sharp continues to operate separately from its Taiwanese owner and its shares will be added to the Nikkei 225 share average next week after a four-year absence.
Nintendo asked Foxconn Tech during the Trump era to provide alternative manufacturing sites outside of China to guard against the trade war, according to one of the people, and the company ended up directing some Switch orders to Sharp as the Japanese company had capacity. additional in Malaysia. . Production volume at the Southeast Asian site is limited, the person said.
Nintendo’s Furukawa has said that those assembly lines are not yet operating at full capacity and that the first batch of them is about to hit stores soon.
A representative for Sharp declined to comment, while a Nintendo spokesperson declined to confirm any details beyond the president’s previous public comments.
The switch assemblers plan to operate at full capacity through the end of this year, avoiding the typical December hiatus that follows the satisfaction of holiday demand. That suggests that Nintendo, in the current quarter, could end up shipping more than the 10.8 million Switch units it managed in the October-December period 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 the addition of Malaysia is part of the effort. Osaka-based Sharp has a history of working with Nintendo, having once assembled the Famicom console and later provided key components for the 3DS handheld. The majority of Switch production continues to be handled by Foxconn Tech in China.
Momentum in switch sales was sustained in October, according to the Nintendo president, and highly anticipated debuts of new consoles from Sony Corp and Microsoft Corp in November were marred by severely limited supplies on launch day. Nintendo is expected to increase its fiscal year sales target from the current 24 million when reporting quarterly results, with David Gibson, chief investment advisor at Astris Advisory Japan, forecasting 26.4 million total sales for the period ending. March 31st.
Launched in 2017, the Switch has sold 68.3 million units as of September 30, and its lifetime sales are on track to exceed 100 million units. The company has expressed confidence in the improved lineup of games it has in store for 2021. Bloomberg News also reported that Nintendo plans an improved hardware overhaul, likely with 4K graphics support, to help extend the Switch’s life cycle. . – Bloomberg
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