Global chip shortage crippling hardware development; Nintendo

By Arya M Nair, Intern Reporter
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Japanese electronic and video game company, Nintendo has recently stated that the global chip shortage which caused the firm to scale back expectations for sales of its popular Switch device is also now affecting its hardware development.

Sales of the Switch device, which is now in its fifth year on the market, fell by a third to 8.28 million units in the six months ending September compared to the same period last year. 

The year-on-year loss in software sales was smaller, and Nintendo increased its full-year software projection by 5 percent to 200 million units. During the financial year, it frequently raised targets that are widely regarded as conservative.

The Kyoto-based company is heavily reliant on its console business at a time when its strong rivals such as Microsoft are expanding subscription and cloud gaming services.

“The semiconductor situation is having some effect on hardware development. We are looking at substituting components and tweaking designs to try and reduce the impact,” Nintendo executive Mr. Ko Shiota, who heads the development team, said in a statement.

The Switch, which can be used handheld or with a TV, was said to be “facing a crucial year” following its release in 2017. In 2019, Nintendo announced the Switch Lite, a handheld-only version, and in October of this year, Nintendo released the Switch OLED, which features improved graphics and memory.

However, analysts say that although the OLED Switch is a great piece of hardware, it’s not a huge upgrade. “It’s not going to drive the demand, without a big software release from the Pokemon franchise, revenue is probably going to come down quite significantly this year.”

Related: Japan’s Sega & Microsoft partner to develop Azure-based global games


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