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[SmokyDave]

Credit to Broken Hope for spotting the story.

http://www.dualshockers.com/2013/08...ue-to-closure-of-vital-semiconductor-factory/

There may be more trouble on the horizon for the already slow-selling Wii U. On Friday the prominent semiconductor manufacturer Renesas Electronics posted its quarterly financial report, together with notice of extraordinary loss and a press release about an impending restructuring of the company.

As part of that restructuring Renesas, that merged with NEC Electronics in 2012, announced that it decided to close four semiconductor plants in Japan within 2-3 years, including the state-of-the-art factory based in Tsuruoka, Yamagata Prefecture (as reported by the Wall Street Journal), and this may spell trouble for Nintendo and the Wii U.

The reason is quite simple. The closing factory was responsible for manufacturing the console’s Embedded DRAM, that is quite properly defined the “life stone” of the console.

The production of the 1 cm-wide semiconductor for Nintendo was responsible for more than half of the load of the factory at peak times, but the slow sales of the console determined a reduction in demand and a gap in the usage of the machinery and personnel, forcing the plant to run at a loss.

Nintendo told the Japanese Magazine Weekly Diamond that the closure of the plant won’t have immediate effect on the production of the Wii U, but the outlook of things isn’t too positive for the future.

Nintendo could try to contract another company to produce the component, but there are circumstances that make it difficult. According to a Renesas executive the production of that semiconductor was the result of the “secret sauce” and state-of-the-art know-how part of the NEC heritage of the Tsuruoka plant, making production elsewhere difficult. In order to restart mass production in a different factory redesigning the component may be necessary.

In light of the situation an increase in the production costs of the console seems very likely on the medium and long term due to the shift of production to a different location and to the possibility of a redesign of the hardware. One thing is for sure: the Wii U really can’t can’t get a break as of late…

So, what's the craic there then?

Will they seamlessly move production elsewhere? Is it likely to hit their bottom line?

I don't know, but I look forward to someone smarter than me telling me what it all means.

 

[Law Abiding Stranger]

I told everyone that WiiU is cursed, no one believed me.

 

[Kouriozan]

Damn, now Nintendo will have to upgrade it.

 

[Danielsan]

Given the speed of Wii U sales I figure they have enough components for the next few years.

 

[Horse Armour]

In light of the situation an increase in the production costs of the console seems very likely on the medium and long term due to the shift of production to a different location and to the possibility of a redesign of the hardware. One thing is for sure: the Wii U really can’t can’t get a break as of late…

So does this mean no price drop this year? If so, Wii U is officially finished.

 

[NZNova]

Nintendo's memory problems continue.

 

[IAmMonodi]

For crying out loud, Nintendo. Price drop, price drop, price drop!

This isn't the Wii homerun of 2006, do a price drop asap!

Things considered, it may be too late for one? Dammit...

 

[SenatorBot]

Thanks smokydave for helping to post it.

 

[Cerity]

There'll be plenty of fabs wanting work, the transition won't be seamless but nintendo should still have quite a lot of stock before the market seriously is in drought of Wii U's.

 

[Guymelef]

Given the speed of Wii U sales I figure they have enough components for the next few years.

.

 

[televator]

Nintendo's had some real popcorn moments with this console.

 

[BY2K]

They just can't catch a fucking break with this console. Jesus.

 

[xValentine]

WiiU upgrade to 8GDDR5 confirmed.

 

[szaromir]

Don't worry, they've already manufactured enough WiiUs to cover the lifetime demand.

 

[Killah]

And the bad news keeps on coming.

 

[qq more]

They just can't catch a fucking break with this console. Jesus.

Tell me about it. Yikes!

 

[xValentine]

Don't worry, they've already manufactured enough WiiUs to cover the lifetime demand.

Boom.gif

 

[Colonel]

I could see Nintendo just buying the plant cheap and producing there own edram it would be all there wouldnt it to make?

 

[Marvel]

Poor Nintendo...

 

[Into]

Would be horrible news if the Wii U was a sales beast, as they would eventually not be able to supply enough consoles and that could have hurt them later down the line

But the current situation means there likely wont be any bad side effects for the consumer, except it might be more difficult to cut the price in the future. I doubt the Wii U will ever have supply issues considering the low demand

 

[mario_O]

 

[big_z]

I feel sorry for people working on wii U games. they must go home and drink every night.

 

[GDGF]

Well if they cancel it now, at least they can point to this and say they had no choice in the matter!

Heh.

 

[Striek]

I could see Nintendo just buying the plant cheap and producing there own edram it would be all there wouldnt it to make?

Smart business plan there. Buy a factory thats losing money to manufacture parts for your system thats losing money.

 

[Amalthea]

And the vultures start circling.

 

[Richie]

The sales are so bad the factory that makes the memory couldn't sustain itself and is gonna close.

Holy Goddamn Shit.

EDIT: 2 to 3 years? Eh, not so bad.

 

[SmokyDave]

Thanks smokydave for helping to post it.

No worries man. I should've directly credited you too for finding the original Japanese story but I forgot. Apologies.

 

[2MF]

Looks like a nothingburger to me in terms of production - the factories only close in 2-3 years, that should be plenty of time to find another factory. It's also plenty of time to build a supply cushion in case it takes longer (and it's not like it takes much to build a cushion at the current level of sales).

 

[Basileus777]

And the vultures start circling.

Start?

 

[wsippel]

TSMC wanted to buy that particular fab, anyway. Unless Nintendo and TSMC somehow fail to reach an agreement, this probably won't have any considerable impact.

 

[SneakyStephan]

I could see Nintendo just buying the plant cheap and producing there own edram it would be all there wouldnt it to make?

Those plants cost between 1-10 billion each, they aren't 'cheap'.

 

[Kouriozan]

And the vultures start circling.

I don't know why but this made me laugh.
Still, that's unfortunate for Nintendo.

 

[bobbytkc]

And the vultures start circling.

This is the vulture already picking at the flesh.

 

[PdotMichael]

I feel sorry for people working on wii U games. they must go home and drink every night.

I feel bad for the factory employees. I hope it doesn't mean they will lose their jobs.

 

[Law Abiding Stranger]

And the vultures start circling.

There is nothing left for vultures at this point.

Just a pile of dry bones.

 

[AzaK]

Well Nintendo need to take this opportunity to make a new console. 'Please understand, the closing of the factory that made a vital component for Wii U was unexpected'.

Do it Nintendo. I'll take the hit on my Wii U

 

[cyberheater]

They probably have already made enough to last the lifetime of the console.

 

[Acorn]

Poor Nintendo. Nobody wants to play with them anymore, their ocean got shark infested.

R.i.p Iwata

 

[Mpl90]

This...does make harder to reach the FY operative profit target. Wii U can't seriously catch a break, holy shit.

EDIT: Closing in 2-3 years? Then, maybe, effects shouldn't be as huge as I feared in the short run. I hope...

 

[wsippel]

Well Nintendo need to take this opportunity to make a new console. 'Please understand, the closing of the factory that made a vital component for Wii U was unexpected'.

Do it Nintendo. I'll take the hit on my Wii U

You know as well as I do that this would be an insanely dumb move.

 

[z0m3le]

interesting, 2 to 3 more years of chips being manufactured, considering that Nintendo could stock pile, a 2016 forced launch for a Wii U successor or just a 2017 launch could probably keep this less of a problem for Wii U and just mean a 6 to 12month earlier than expected replacement

 

[cafemomo]

So Nintendo is actually doomed for once?

Time to upgrade dat 34MB eRAM /2GB DDR3 to 8GB GDDR5 Ninty

 

[Coldnoodle]

Well Nintendo need to take this opportunity to make a new console. 'Please understand, the closing of the factory that made a vital component for Wii U was unexpected'.

Do it Nintendo. I'll take the hit on my Wii U

Wait 4 years.

 

[ASIS]

Well Nintendo need to take this opportunity to make a new console. 'Please understand, the closing of the factory that made a vital component for Wii U was unexpected'.

Do it Nintendo. I'll take the hit on my Wii U

Honestly, at this point I am not really apposing this idea. I mean really.. Yikes!

 

[Coldnoodle]

It's closing in 2-3 years...

Meh

 

[Seeds]

Factory responsible for Wii U eDram to close... in 2 to 3 years.

That's plenty of time to find a new place to manufacture whatever it is that they want, which I'm sure Nintendo is aware of.

 

[Taker666]

I suppose Nintendo could just get them to manufacture a bunch in advance of them closing.

 

[Marvel]

Must be very upsetting for Iwata and co to see your project failing.

 

[Dorj]

Nintendo should increase the price, as the console has now become a rare collectible item

 

[goomba]

First time iv ever heard the wii u eDRAM called "special sauce" , the existance of this ram is usually ignored because wiiu is supposed to be last gen.