Nintendo (NTDOY 2.79%) has been urging its Switch suppliers to boost production as it deals with a surge in demand brought on by the COVID-19 pandemic.
People familiar with the matter told Bloomberg Nintendo revised its forecast and now wants suppliers to meet its target for 22 million Switch devices in its fiscal year which ends in March of 2021.
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While 22 million units is in line with last year, it’s up from the slight decrease Nintendo expected this year given the game console is entering its fourth year. Typically devices aren’t sold out when it’s been on the market for years. But with millions of people sheltering in place as the pandemic spreads, Nintendo is seeing increased demand and thus revised its forecast upward.
The Switch is unavailable in certain areas around the globe such as Japan and the U.S. In the U.S. it's sold out at GameStop, Best Buy, and Walmart. That has resulted in price gouging, which some listings online pricing the game console at more than $500. The MSRP for the Switch is $300.
Boosting units may not be easy, given supply chain disruptions due to the pandemic. Most of the Switch game consoles are assembled in China and while the supply chain is returning to normal there are still constraints for certain components such as memory chips. As a result, it's not clear if suppliers will be able to meet Nintendo’s increased orders. “We hope (suppliers) will be responsive to a production increase, but for the procurement of some parts, the outlook remains uncertain, and we can’t forecast exactly how many Switch units can be supplied,” the Nintendo spokesman told Bloomberg.
If Nintendo is able to increase production there are concerns it could end up in an oversupply situation once the COVID-19 virus is contained.
