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WSJ: Nintendo Battles Apple for Parts as Switch Demand Rises

ggx2ac

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More at the link: https://www.wsj.com/articles/nintendo-battles-apple-for-parts-as-switch-demand-rises-1496136603

Nintendo has told suppliers and assemblers it hopes to make nearly 20 million units of the Switch device in the year ending March 2018, people involved in the discussions said. Though the company’s official sales target for the year is 10 million, strong demand suggests it can sell many more—if it can make them.

The problem is an industrywide capacity shortage for components used in smartphones, computer servers and other digital devices. These include the NAND flash-memory chips that store data, liquid-crystal displays and [Linear Resonant Actuators] the tiny motors that enable the Switch’s hand-held controllers to imitate the feel of an ice cube shaking in a glass.

“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., the troubled industrial giant that is leaning on flash memory to survive. She cited demand from smartphone makers—Apple and Chinese companies are among Toshiba’s customers—and data centers.


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.

Nintendo and Apple representatives declined to comment on supply-chain issues.

Analysts say rivals for the sought-after parts can often offer better terms than Nintendo. Makers of data-center servers tend to use newer and higher-margin components, while smartphone makers issue larger orders than Nintendo.

If Nintendo increased spending significantly to secure more parts, that could risk driving the Switch’s production cost above the $299 retail price. President Tatsumi Kimishima, has said he doesn’t want to sell the Switch at a loss.

Credit to Nanashrew for posting the article.
 

massoluk

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Dec 19, 2011
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Some have told us mobile market was going to hurt console games market, but we didn't listen.
 

ggx2ac

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Apr 5, 2016
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Hmm, that doesn't sound very promising...

NAND flash shortages were expected, I remember reading about it last year too.

Basically if there's a shortage, the cost increases.

But in that same article I read last year, apparently some businesses in China are manufacturing NAND flash memory because of the shortage.
 

Nanashrew

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Feb 16, 2014
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Hmm, that doesn't sound very promising...

Yeah. There's going to be some struggle. But that 20 million does at least strengthen that Financial Times rumor about wanting to increase production.

Also seems Japan really likes it.
Some families are buying multiple units, treating them more like smartphones than living-room consoles because of the Switch’s portability.

Yukiko Amakawa, a 36-year-old homemaker in Fukuoka, Japan, said her family of four owns three Switches—one for herself, one for her husband to play on the train while commuting and a third for their children, a 6-year-old boy and 3-year-old girl.
 

llien

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I guess we're back to Nintendoomed.

Looks more like a daily "switch is in high demand" thread, to be honest.

Apple is using no screen that overlaps with what Switch is using, yet they somehow "fight" for it.

Apple sells dozens of millions of iphones and about a dozen million ipads PER QUARTER.

Give me a break.
 
Nov 23, 2011
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I doubt this includes demand for puny little 32GB NAND flash memory, smartphones are moving past that.

32GB is the cheapest version of most phones out there, including the iPhone that Nintendo seems to be competing against now. There's no need for more space than that for most people.
 

Theswweet

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I can believe this, since wasn't the reason that the LG G6 had an older processor was because Samsung was hogging all the newer ones? I guess that explains why Kimishima was worried about actually shipping units...
 

big_z

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Oct 15, 2005
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Doesn't matter if Nintendo spends more money. Apple gets what it wants, everyone else waits. Been like this for years, the apple contracts are too valuable.
 

jroc74

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Jun 1, 2013
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^^Yup. Not sure about the LG issue but it makes sense. I usually see articles like this about screens.

Some have told us mobile market was going to hurt console games market, but we didn't listen.
Put in handheld and this statement is alot more true.
 
Jun 19, 2013
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Looks more like a daily "switch is in high demand" thread, to be honest.

Apple is using no screen that overlaps with what Switch is using, yet they somehow "fight" for it.

The sole supplier for Switch screens is Japan Display, Inc., who also happens to be the sole supplier of iPhone screens.

Also Apple has a history of competing for key parts. From an old story about how Palm and webOS went from hero to zero:

"We told HP we needed better displays [for the Pre 3]. They'd come back and say, ‘Apple bought them all. Our suppliers tell us we need to build them a factory if we want the displays' and they weren't willing to put the billion dollars upfront to do that," one source said.

---

Apple sells dozens of millions of iphones and about a dozen million ipads PER QUARTER.

Give me a break.

That's precisely why Apple competes with other companies for parts, and why other companies find it difficult to secure similar or identical parts. Apple is selling high volumes of a small number of devices, so the order numbers it puts in for parts must be huge compared to any other company (for example, Samsung produces 100s of phones, all with different specifications, Apple's lineup is less than half a dozen with more shared between them (the screen on an iPhone 6s is identical to the 6, the screen on the 5s identical to the 5...)
 

Bluth54

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32GB is the cheapest version of most phones out there, including the iPhone that Nintendo seems to be competing against now. There's no need for more space than that for most people.

Phones and tablets don't have games that can take up more than the 26 GB of internal memory available in the Switch. The fact many phones only have 32GB of flash memory is a shitty excuse for the lack of built in flash memory in the Switch.
 

JonnyDBrit

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I doubt this includes demand for puny little 32GB NAND flash memory, smartphones are moving past that.

On high end models, sure. But lower end models released just this year still hover around 32GB, and those will thus eat at supply.

So now we know part of why Nintendo may struggle to bump up production, despite intent to do so - its own issues with supply.

Edit:
Phones and tablets don't have games that can take up more than the 26 GB of internal memory available in the Switch. The fact many phones only have 32GB of flash memory is a shitty excuse for the lack of built in flash memory in the Switch.

The point is that it was supposed Nintendo shouldn't have trouble getting 32GB storage due to low demand. In reality, there is still plenty of demand from mobile makers due to lower end products.
 

Theswweet

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On high end models, sure. But lower end models released just this year still hover around 32GB, and those will thus eat at supply.

So now we know part of why Nintendo may struggle to bump up production, despite intent to do so - its own issues with supply.

LG G6 only has 32GB too, and that's a flagship phone.
 

Nanashrew

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Phones and tablets don't have games that can take up more than the 26 GB of internal memory available in the Switch. The fact many phones only have 32GB of flash memory is a shitty excuse for the lack of built in flash memory in the Switch.

No one made an excuse for the Switch? They just explained that phones still do have 32GB models that the Switch will have to compete with.
 

samar11

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The sole supplier for Switch screens is Japan Display, Inc., who also happens to be the sole supplier of iPhone screens.

Also Apple has a history of competing for key parts. From an old story about how Palm and webOS went from hero to zero:

Which is a joint venture by Sony, Toshiba, and Hitachi.

Had no idea lol
 

cw_sasuke

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Reading this... And reminding myself that a couple of months ago a majority of GAF was thinking they could sell Switch for sub 200 bucks lol.

Let's hope they can figure this shit out without having to increase production costs.
 

Cerium

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Reading this... And reminding myself that a couple of months ago a majority of GAF was thinking they could sell Switch for sub 200 bucks lol.

Let's hope they can figure this shit out without having to increase production costs.

More likely there will just be shortages for the foreseeable future.

Well, at least there isn't much competition for those Tegra chips...

You joke but those probably are one of the easiest Switch parts to source.
 

llien

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The sole supplier for Switch screens is Japan Display, Inc., who also happens to be the sole supplier of iPhone screens.:

No, not really, LG, and god knows who else is also making them:

The displays are manufactured worldwide by different suppliers. Currently [the] iPhone, and iPod Touch displays are made by LG[10] and Japan Display Inc.[11]

https://en.wikipedia.org/wiki/Retina_Display#cite_note-reuters_display_info_1-11


Displays are also quite different, Apple goes for state of the art high DPI, nothing like that is used by Nintendo, I doubt they are even produced on the same equipment.
 
Jun 19, 2013
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I doubt they are even produced on the same equipment.

That's the important part, yes. But the actual display doesn't need to be the same, and the dpi of the Switch's screen and characteristics are close enough to an iPad that they could be cut from the same materials and made with the same equipment.

No, not really, LG, and god knows who else is also making them:

The displays are manufactured worldwide by different suppliers. Currently [the] iPhone, and iPod Touch displays are made by LG[10] and Japan Display Inc.[11]

https://en.wikipedia.org/wiki/Retina_Display#cite_note-reuters_display_info_1-11

Your'e right, JDI is only cited as a "major" supplier of iPhone displays. My bad. It seems Sharp, LG, and JDI produced screens for the iPhone 6 and 6 Plus, but Apple of course sources from several suppliers in order to meet demand.
 
Jul 28, 2014
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I can't believe Toshiba Corp is using artificial scarcity to drive the sales of their NAND flash memory. Damn them.
 
Aug 19, 2006
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On high end models, sure. But lower end models released just this year still hover around 32GB, and those will thus eat at supply.

So now we know part of why Nintendo may struggle to bump up production, despite intent to do so - its own issues with supply.

Edit:


The point is that it was supposed Nintendo shouldn't have trouble getting 32GB storage due to low demand. In reality, there is still plenty of demand from mobile makers due to lower end products.

Indeed, a lot are still shipping with 16GB for those outside the high end phone bubble, half the market is brands most wouldn't recognise. Hell the cheap one I got last year is 8GB but that.. was a mistake.
 

ggx2ac

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Also, isn't JDI about to collapse? Wouldn't that make sourcing displays even worse?

No, not yet. They got bailed out by the government to invest in OLED manufacturing and have lost Apple as one of their biggest clients because they were too late to supply OLED and will have to catch up while competing against Samsung and LG which LG is the new supplier for Apple using OLED screens for their next phone...

Well yeah, there are some troubles for them.
 

Lelou

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I hope that the problem will be solved in time for the winter season, and the big entries that will come with it..
 

J@hranimo

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Everyone doing the "I'm waiting until Mario" strategy are going to get fucked tbh.

No wonder Nintendo is set on the 10 mil production schedule for this FY.
 

JustenP88

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If Nintendo can't produce and sell 20 million Switches in its first fiscal year then they are in some serious trouble.

I don't see any cause for concern
 

Kthulhu

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No, not yet. They got bailed out by the government to invest in OLED manufacturing and have lost Apple as one of their biggest clients because they were too late to supply OLED and will have to catch up while competing against Samsung and LG which LG is the new supplier for Apple using OLED screens for their next phone...

Well yeah, there are some troubles for them.

Ironic, considering LG doesn't make OLED phones.
 

Visualante2

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If there were shortages with the rumble sensors in controllers then surely we'd see shortages of separate joy cons like we did with the wiimote. We're only seeing that with the red and blue joycon bundle as far as I can tell so I'm guessing it is something else.

I do think we're going to have to see a memory bump if not a full redesign. 32GB chips won't be the floor for phones for much longer.
 

ggx2ac

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Apr 5, 2016
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So... what you're all saying is that the next Switch revision will have an OLED screen?

No, the most problematic part that Nintendo may have to look for with other manufacturers if possible is NAND flash memory.

That is the most likely part that is going to suffer shortages which will make it difficult for Nintendo to pay for at an increased cost.
 

andthebeatgoeson

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Phones and tablets don't have games that can take up more than the 26 GB of internal memory available in the Switch. The fact many phones only have 32GB of flash memory is a shitty excuse for the lack of built in flash memory in the Switch.
You didn't read the comment he replied to?

Not a whole lot of Nintendo artificial demand GAF in here. Was always a stupid excuse. Not only do they have to judge the market when Nintendo 'fans' are like the Democratic party (wii was 2008, wii u was 2010, 3ds was 2012, nes classic was 2016, switch is 2018?), You can't demand an increase when debo is taking all the parts.