In the 78th Nintendo AGM Q&A session, an investor asked Nintendo whether component shortages and price increases are going to affect sales of the Nintendo Switch and their plans to counteract it.
Kimishima, the previous Nintendo President, said they are constantly negotiating with manufacturers to avoid having a significant impact on the cost of producing 20 million consoles this fiscal year. Hirokazu Shinshi, Senior Executive Officer at Nintendo, added that this year is turning out to be another tough year for component prices but he believes Nintendo can have the units ready to meet their 20 million forecast.
Q: The semiconductor market has been very active lately, leading to outcries from other industries over component shortages and price increases. Things have calmed down a bit compared to the period between last year and the end of the year before that, but it seems like supplies of flash memory and passive components will still be fairly tight. I would like to hear what you think about the effects this will have on Nintendo Switch production and packaged software, as well as about how these prices will affect sales, and what you will do to counteract it.Kimishima: We are planning to sell 20 million Nintendo Switch hardware units during this fiscal year, and are not having any problems securing the production quantities to do so. As you said, component prices are volatile, but we are negotiating so that we can avoid this having a significant impact on the cost of producing these 20 million units.Hirokazu Shinshi (Senior Executive Officer): It was a tough environment last year, and it was not easy to procure parts, such as memory and passive components, but I think that manufacturers were exceptionally willing to cooperate with us because of the momentum of our product, Nintendo Switch, and because we shared with many of them our vision. Not only last year, but from several years ago we have seen rather tough situations come and go with regards to memory, so we have spent a lot of time communicating with manufacturers, and continue to negotiate on factors such as prices and lead times. This year is turning out to be another tough one, and that may well continue into next year, so we will continue our conversations with them to make sure we are getting adequate supply at a price that is as close to what we are looking for as possible. As for production quantities during this fiscal year, I believe we can have the units ready to meet our forecasts.