Technology

Nintendo says chip shortage may bring down Switch sales by 11.5%

This would be the first drop in console sales in five years after its sales exploded during the pandemic

Nintendo Switch chip shortage
Photo: REUTERS/Issei Kato
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  • Nintendo expects to sell 25.5 million units in the business year beginning April 1;
  • In the previous year, the Japanese company sold 28.8 million units, which resulted in a profit of US $ 5.9 billion;
  • The market observes whether the Switch will be able to keep up amid speculation about new games and a hardware update;
  • Nintendo shares have risen 90% since March 2020.

Nintendo said on Thursday that the global chip shortage may bring down the annual sales of the Switch video game by 11.5%. This would be the first drop in console sales in five years, after its sales skyrocketing during the pandemic.

The company expects to sell 25.5 million hardware units of the video game in the commercial year that started on April 1. In the previous year, Nintendo sold 28.8 million units, which resulted in a profit of 640.6 billion yen – equivalent to the $ 5.9 billion -, an increase of 82% about the previous period.

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Nintendo President Shuntaro Furukawa also said that the chip shortage, which has affected electronics manufacturers around the world, is affecting production and increasing uncertainty.

But, of course, Nintendo is known for conservative predictions, which prompt it to make incremental revisions. Last May, for example, amid growth in game sales worldwide, Nintendo said that Switch software sales would be below the previous year, but ended the commercial year on March 31 with sales 20% above forecast.

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From consultancy Kantan Games, Serkan Toto said that Nintendo underestimates itself with these conservative predictions and expects Switch hardware sales of 25-30 million units and software sales of 250 million units.

Will Switch be able to keep up?

Each generation of game consoles typically lasts about seven years, before being replaced by the next, with peak sales generally reached around the fifth year. The market notes whether the Switch will be able to keep the sales paces amid speculation about new games and a hardware update.

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The hybrid nature of the Switch console, portable and domestic, will extend its life cycle, said Furukawa. “Hardware and software are still selling well – it’s a different situation than previous consoles.”

Nintendo is highly dependent on its console business, unlike rivals like Sony and Microsoft, which have diverse lines of business. Its expansion into the growing mobile gaming market is largely stagnant.

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