Apple's Domination of Component Supply Chain Said to Be Constraining Nintendo Switch Production

Tuesday May 30, 2017 9:11 AM PDT by Mitchel Broussard
A new article by The Wall Street Journal today has taken a look into the increased pressure put on suppliers of NAND flash memory units, as well as other smartphone components, and how Apple might be indirectly affecting the supply of the Nintendo Switch. According to people in the industry, smartphone makers -- namely Apple -- and their increasing ramp-up on component manufacturing for high-end devices have led to dwindling supplies of Nintendo Switch.

Specifically, Nintendo is lacking components related to NAND flash-memory chips, liquid-crystal displays, and the motors used in the Switch's HD Rumble feature. NAND memory chip supplies are said to be placed mainly upon the shoulders of Toshiba's struggling NAND chip unit, which is still up for sale despite legal troubles that have plagued the company over the past few weeks. In April, Apple was rumored to be looking into spending several billion for a "substantial stake" in Toshiba's NAND chip unit.


Apple's manufacturing ramp-up on the upcoming "iPhone 8" is said to be behind some of the supply chain constraints faced by Nintendo, as well as ongoing demand for the iPhone 7. Currently, Apple manufactures iPhone 7 with an LCD display and various internal sizes of NAND memory. The Nintendo Switch has a multi-touch LCD display and 32GB of internal memory.
People in the industry say the rapid expansion of web-based services for corporations has driven demand for computer servers that use flash memory. Continued demand for Apple’s iPhone 7 and a 10th anniversary model of the iPhone expected later this year are also keeping parts makers at full capacity, helping power Japan’s economy to its longest growth streak since 2006.

“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.
For Nintendo, the company has said it hopes to make as many as 20 million Switch units by the end of its financial year, in March 2018. Thanks to supply constraints, the actual sales target of the year is 10 million units, although "strong demand suggests it can sell many more - if it can make them." In its first month on the market, Nintendo sold 2.74 million Switch units.

Analysts watching the supply chain said that Nintendo's rivals "offer better terms" than the video game company, and that smartphone makers like Apple specifically "issue larger orders than Nintendo." This leads to manufacturers giving preference to companies other than Nintendo, and subsequent shortages for its products. Increased spending to secure more parts at a faster rate for the Switch isn't a possibility for Nintendo, as president Tatsumi Kimishima doesn't want the console's $299 retail price to increase.

Tags: Nintendo, Nintendo Switch
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keysofanxiety
20 months ago
Wow, imagine reading this in the mid '90s. An "Apple Computer phone", at least 650,000 manufactured on a daily basis, is constraining Nintendo's production for their current console.

Literally unthinkable back then. Crazy how times change.
Rating: 12 Votes
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NT1440
20 months ago
Let's stop with the nonsense. I got major pushback a couple of years ago here when I said that world NAND supplies were well outstripped by demand. Yes Apple is a major contributor to the shortage, but this is one of those "let's pull apple into the headline for clicks" stories.
Rating: 6 Votes
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OldSchoolMacGuy
20 months ago
The article says that demand for flash memory from EVERYONE is causing the issue. Not just Apple. But if you throw Apple in the headline you get 1000x more clicks, especially if there's controversy.
Rating: 4 Votes
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macfacts
20 months ago

The iphone a more powerful device than the switch. Nintendo needs to focus on games for the app store and android


Never going to happen. Nintendo doesn't want to give up 30%
Rating: 2 Votes
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NT1440
20 months ago

How much is supply constraint, and how much of it is douche bags buying them up and trying to resell them for profit?

Same goes for the nes classic and amiibo.

I guarantee you that douche bags aren't buying up NAND modules and reselling them. :rolleyes:
Rating: 2 Votes
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NeroAZ
20 months ago
How much is supply constraint, and how much of it is douche bags buying them up and trying to resell them for profit?

Same goes for the nes classic and amiibo.
Rating: 1 Votes
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macduke
20 months ago

I'm not sure what you would've left out of the box. The straps are needed for multiple launch games and the dock allows you to play on an external screen. I don't know what the grip is you reference.
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Agree with all of this. I didn't get the Pro Controller until a month or so after launch - that that thing great. I'm just glad they launched in March, so they can get a lot of this sorted before the holiday season.

Yeah, a lot of people thought that was a missed opportunity, but it was definitely the right thing to do to wait until March. As for the controller, I still think the Xbox Elite controller is better, but it's also about twice the cost. However, I kind of wish they had put real variable pressure triggers on it for racing games. For any shooters that might come to the platform, a button is probably just as well as it's good for reaction time. I also didn't get the Pro Controller for a month or so. I was walking through the mall and popped into Gamestop and they said they stocked them five minutes before I came in. But really it's surprising how great the split controllers feel. I had to stay at home with a sick baby for a few days back in April and having the split controllers saved me, as the kid could lay in my lap propped against my arm and I could have each arm free to either side. It's nice to not "T-Rex it" sometimes.
Rating: 1 Votes
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macduke
20 months ago

Same here. I had an NES, SNES, N64, and Gamecube; I played Wii and WiiU a few times, but neither piqued my interest, so I stuck with Xbox and PC for gaming until the Switch. I just told some friends the other day, "I think the Switch might be my favorite piece of gaming hardware, ever." Granted, the game library won't be the same as other consoles or PC (lack of power, etc.), but so far, Nintendo has hit the sweet spot of having quality gaming on the go and at home. I still play my Xbox and PC, but every time I do, I think, "Man, I wish I could take this with me." I'm really glad to see Nintendo back in the game, and I am hopeful that the shortages of Switches are at least partially due to the fact that people just really want to buy the Switch.

Yeah, I was the same, NES through N64. In college my best friend had a GameCube and later a Wii and so I played that with him a lot, and eventually got my own Wii. Then Xbox 360 and One all the way. In recent years I've become a lot busier with my family and having kids, so I don't get to sit down and play as much. The closest I had gotten to a complete AAA game in recent memory was completing about two-thirds of Fallout 4. Since the Switch came out, I've put in over 100 hours in Breath of the Wild alone, because I can bring it with me to work and play on my lunch breaks, when I'm waiting in line somewhere, etc. It slips nicely into the side pocket of my small Incase brand iPad bag, so I often have it with me. I can also play it in bed before I fall asleep instead of what I would normally do—which is getting angry about the news or playing some stupid smartphone game.

People like to complain about the graphics but they're between the Xbox 360 and One and you can carry it with you anywhere. For people like me who grew up on truly slow hardware and was blown away by Ocarina of Time when I was a kid, games like BoTW look absolutely stunning. For me it's not so much about hyper realism as it is good quality game play, and what I've seen so far suggests Nintendo is returning to their roots while also keeping up with modern game play. Games will make or break the Switch, but if we get a dozen games half as good as BoTW, it's going to be a very successful console and might also be my favorite piece of gaming hardware ever. It's so much more simplistic than my Xbox One, and that alone is a breath of fresh air because it's not always glitching out. It really does seem more Apple-like than anything else I've used.
Rating: 1 Votes
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Chrome262
20 months ago

Let's stop with the nonsense. I got major pushback a couple of years ago here when I said that world NAND supplies were well outstripped by demand. Yes Apple is a major contributor to the shortage, but this is one of those "let's pull apple into the headline for clicks" stories.

I agree, even the article says that phone developers offer better deals and larger orders, seems like Nintendo, once again, planned poorly
Rating: 1 Votes
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TomaxXamot
20 months ago

Apple shipped the Air Pods separate from the latest iPhone. I think Nintendo could have gotten away with the same thing. Give you the bare minimum in the box, with a magical, but optional, add on sold separately.


Possibly, but they couldn't take the risk. Nintendo needed to make the Switch a hit after the failure of the Wii U. Sure they could last for years with their cash in the bank, but they needed a hit flagship product for a number of reasons and not including a dock would have been a risk. There have already been complaints of the pricing of the non-included add ons. Couple that with the lack of available stock on some of the add-ons and consumers would have been pissed if the dock wasn't included and was sold out everywhere for months and months. Also, without the grip it would have undermined the portable/home console hybrid concept.
Rating: 1 Votes
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