Apple's Domination of Component Supply Chain Said to Be Constraining Nintendo Switch Production

[MacRumors]

A new article by The Wall Street Journal today has taken a look into the increased pressure put on suppliers of NAND flash memory units, as well as other smartphone components, and how Apple might be indirectly affecting the supply of the Nintendo Switch. According to people in the industry, smartphone makers -- namely Apple -- and their increasing ramp-up on component manufacturing for high-end devices have led to dwindling supplies of Nintendo Switch.

Specifically, Nintendo is lacking components related to NAND flash-memory chips, liquid-crystal displays, and the motors used in the Switch's HD Rumble feature. NAND memory chip supplies are said to be placed mainly upon the shoulders of Toshiba's struggling NAND chip unit, which is still up for sale despite legal troubles that have plagued the company over the past few weeks. In April, Apple was rumored to be looking into spending several billion for a "substantial stake" in Toshiba's NAND chip unit.

Apple's manufacturing ramp-up on the upcoming "iPhone 8" is said to be behind some of the supply chain constraints faced by Nintendo, as well as ongoing demand for the iPhone 7. Currently, Apple manufactures iPhone 7 with an LCD display and various internal sizes of NAND memory. The Nintendo Switch has a multi-touch LCD display and 32GB of internal memory.

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.

"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.

For Nintendo, the company has said it hopes to make as many as 20 million Switch units by the end of its financial year, in March 2018. Thanks to supply constraints, the actual sales target of the year is 10 million units, although "strong demand suggests it can sell many more - if it can make them." In its first month on the market, Nintendo sold 2.74 million Switch units.

Analysts watching the supply chain said that Nintendo's rivals "offer better terms" than the video game company, and that smartphone makers like Apple specifically "issue larger orders than Nintendo." This leads to manufacturers giving preference to companies other than Nintendo, and subsequent shortages for its products. Increased spending to secure more parts at a faster rate for the Switch isn't a possibility for Nintendo, as president Tatsumi Kimishima doesn't want the console's $299 retail price to increase.

Article Link: Apple's Domination of Component Supply Chain Said to Be Constraining Nintendo Switch Production

 

[Avieshek]

Apple could just skip the 32GB module.

 

[NT1440]

Let's stop with the nonsense. I got major pushback a couple of years ago here when I said that world NAND supplies were well outstripped by demand. Yes Apple is a major contributor to the shortage, but this is one of those "let's pull apple into the headline for clicks" stories.

 

[Chrome262]

Let's stop with the nonsense. I got major pushback a couple of years ago here when I said that world NAND supplies were well outstripped by demand. Yes Apple is a major contributor to the shortage, but this is one of those "let's pull apple into the headline for clicks" stories.

I agree, even the article says that phone developers offer better deals and larger orders, seems like Nintendo, once again, planned poorly

 

[keysofanxiety]

Wow, imagine reading this in the mid '90s. An "Apple Computer phone", at least 650,000 manufactured on a daily basis, is constraining Nintendo's production for their current console.

Literally unthinkable back then. Crazy how times change.

 

[ArtOfWarfare]

There'd be hell to pay if Nintendo decided to change it now, but I think Nintendo could have gotten away with putting a lot less in the box for $299.

The grip, straps, HDMI, and dock could have all been left out. Of course, I can't imagine that all costs Nintendo more than $20 to include in the box, so probably wouldn't give Nintendo much more money to entice suppliers with.

 

[Gorms]

Apple don't use LCD's at the same size or pixel density as the Switch screen. So unless it's space on the manufacturing line they can't really cop the blame for that part?

 

[macduke]

There'd be hell to pay if Nintendo decided to change it now, but I think Nintendo could have gotten away with putting a lot less in the box for $299.

The grip, straps, HDMI, and dock could have all been left out. Of course, I can't imagine that all costs Nintendo more than $20 to include in the box, so probably wouldn't give Nintendo much more money to entice suppliers with.

Yeah, but that is part of what makes Nintendo successful. You have everything in the box to get going. The big appeal of the Switch is that you can play it on the TV or on the go. Dropping it in the dock is stupid easy. Also there was pretty big blow back in 2006/2007 when people started breaking their TVs and Nintendo had to retroactively send out better straps and bumper guards to do damage control. Leaving it out today could be a nightmare.

I love my Switch and look forward to seeing where Nintendo takes it in the coming years. They did a great job with it, and it's one of my favorite pieces of non-Apple hardware. I'm glad to see Nintendo having success once again, and hope they can pull through this shortage. So far this thing is outselling the Wii, which was also supply constrained, but I think they're doing a lot of things right this time with the Pro controller, more grown up hardware and the most epic launch game ever.

 

[trainwrecka]

There'd be hell to pay if Nintendo decided to change it now, but I think Nintendo could have gotten away with putting a lot less in the box for $299.

The grip, straps, HDMI, and dock could have all been left out. Of course, I can't imagine that all costs Nintendo more than $20 to include in the box, so probably wouldn't give Nintendo much more money to entice suppliers with.

I'm not sure what you would've left out of the box. The straps are needed for multiple launch games and the dock allows you to play on an external screen. I don't know what the grip is you reference.
[doublepost=1496158912][/doublepost]

I love my Switch and look forward to seeing where Nintendo takes it in the coming years. They did a great job with it, and it's one of my favorite pieces of non-Apple hardware. I'm glad to see Nintendo having success once again, and hope they can pull through this shortage. So far this thing is outselling the Wii, which was also supply constrained, but I think they're doing a lot of things right this time with the Pro controller, more grown up hardware and the most epic launch game ever.

Agree with all of this. I didn't get the Pro Controller until a month or so after launch - that thing is great. I'm just glad they launched in March, so they can get a lot of this sorted before the holiday season.

 

[NeroAZ]

A new article by The Wall Street Journal today has taken a look into the increased pressure put on suppliers of NAND flash memory units, as well as other smartphone components, and how Apple might be indirectly affecting the supply of the Nintendo Switch. According to people in the industry, smartphone makers -- namely Apple -- and their increasing ramp-up on component manufacturing for high-end devices have led to dwindling supplies of Nintendo Switch.

Specifically, Nintendo is lacking components related to NAND flash-memory chips, liquid-crystal displays, and the motors used in the Switch's HD Rumble feature. NAND memory chip supplies are said to be placed mainly upon the shoulders of Toshiba's struggling NAND chip unit, which is still up for sale despite legal troubles that have plagued the company over the past few weeks. In April, Apple was rumored to be looking into spending several billion for a "substantial stake" in Toshiba's NAND chip unit.

Apple's manufacturing ramp-up on the upcoming "iPhone 8" is said to be behind some of the supply chain constraints faced by Nintendo, as well as ongoing demand for the iPhone 7. Currently, Apple manufactures iPhone 7 with an LCD display and various internal sizes of NAND memory. The Nintendo Switch has a multi-touch LCD display and 32GB of internal memory.
For Nintendo, the company has said it hopes to make as many as 20 million Switch units by the end of its financial year, in March 2018. Thanks to supply constraints, the actual sales target of the year is 10 million units, although "strong demand suggests it can sell many more - if it can make them." In its first month on the market, Nintendo sold 2.74 million Switch units.

Analysts watching the supply chain said that Nintendo's rivals "offer better terms" than the video game company, and that smartphone makers like Apple specifically "issue larger orders than Nintendo." This leads to manufacturers giving preference to companies other than Nintendo, and subsequent shortages for its products. Increased spending to secure more parts at a faster rate for the Switch isn't a possibility for Nintendo, as president Tatsumi Kimishima doesn't want the console's $299 retail price to increase.

Article Link: Apple's Domination of Component Supply Chain Said to Be Constraining Nintendo Switch Production

 

[ArtOfWarfare]

I'm not sure what you would've left out of the box. The straps are needed for multiple launch games and the dock allows you to play on an external screen. I don't know what the grip is you reference.

I only have Zelda, Mario Kart, and Snipperclips, so maybe one of the other titles requires them, but the straps aren't necessary for any of those games. It's certainly more comfortable holding the controllers with the straps, but I wouldn't say they're needed.

Playing on an external screen is nice, but not necessary. I actually played Zelda in handhold mode for the first week after getting the system. Didn't bother dealing with the rats nest and hooking up the dock until later.

The grip is the part that holds two joycons together to turn them into a single dual stick controller. Like the straps and dock, it's nice, but not necessary.

 

[macduke]

I'm not sure what you would've left out of the box. The straps are needed for multiple launch games and the dock allows you to play on an external screen. I don't know what the grip is you reference.
[doublepost=1496158912][/doublepost]

Agree with all of this. I didn't get the Pro Controller until a month or so after launch - that that thing great. I'm just glad they launched in March, so they can get a lot of this sorted before the holiday season.

Yeah, a lot of people thought that was a missed opportunity, but it was definitely the right thing to do to wait until March. As for the controller, I still think the Xbox Elite controller is better, but it's also about twice the cost. However, I kind of wish they had put real variable pressure triggers on it for racing games. For any shooters that might come to the platform, a button is probably just as well as it's good for reaction time. I also didn't get the Pro Controller for a month or so. I was walking through the mall and popped into Gamestop and they said they stocked them five minutes before I came in. But really it's surprising how great the split controllers feel. I had to stay at home with a sick baby for a few days back in April and having the split controllers saved me, as the kid could lay in my lap propped against my arm and I could have each arm free to either side. It's nice to not "T-Rex it" sometimes.

 

[NeroAZ]

How much is supply constraint, and how much of it is douche bags buying them up and trying to resell them for profit?

Same goes for the nes classic and amiibo.

 

[NT1440]

How much is supply constraint, and how much of it is douche bags buying them up and trying to resell them for profit?

Same goes for the nes classic and amiibo.

I guarantee you that douche bags aren't buying up NAND modules and reselling them.

 

[ArtOfWarfare]

Yeah, but that is part of what makes Nintendo successful. You have everything in the box to get going. The big appeal of the Switch is that you can play it on the TV or on the go. Dropping it in the dock is stupid easy. Also there was pretty big blow back in 2006/2007 when people started breaking their TVs and Nintendo had to retroactively send out better straps and bumper guards to do damage control. Leaving it out today could be a nightmare.

Apple shipped the Air Pods separate from the latest iPhone. I think Nintendo could have gotten away with the same thing. Give you the bare minimum in the box, with a magical, but optional, add on sold separately.

 

[macduke]

Apple shipped the Air Pods separate from the latest iPhone. I think Nintendo could have gotten away with the same thing. Give you the bare minimum in the box, with a magical, but optional, add on sold separately.

Maybe. But Nintendo was in kind of a desperate situation prior to the Switch. Their mobile stuff was looking kind of up, but the Wii U was practically a disaster. They couldn't afford to make an Apple-like bet. As it stands now, people are already saying they're being greedy with things like $70 Pro Controllers and $80 Joy-Cons. From what I've read, companies like Game Stop say that the Switch has a high rate of attachment when it comes to accessory sales along with the console. People are buying device cases, screen protectors, extra cables, battery packs, extra docks, stands, cartridge cases, micro SD cards, Pro Controllers, extra Joy-Cons in different colors and silicon wraps. So they're probably doing ok, even for the non-Nintendo made accessories as I think they get a portion of the sales through licensing fees.

 

[jdillings]

No it's due to Nintendo's practice of creating artificial scarcity for all of its products from Amiibo to NES Classic to Switch.

 

[OldSchoolMacGuy]

The article says that demand for flash memory from EVERYONE is causing the issue. Not just Apple. But if you throw Apple in the headline you get 1000x more clicks, especially if there's controversy.

 

[Iconoclysm]

No it's due to Nintendo's practice of creating artificial scarcity for all of its products from Amiibo to NES Classic to Switch.

Myth.

 

[gkarris]

There'd be hell to pay if Nintendo decided to change it now, but I think Nintendo could have gotten away with putting a lot less in the box for $299.

The grip, straps, HDMI, and dock could have all been left out. Of course, I can't imagine that all costs Nintendo more than $20 to include in the box, so probably wouldn't give Nintendo much more money to entice suppliers with.

To increase momentum, rumor is that Nintendo is going to sell a core unit without the dock for around $200 - I myself don't use the dock.

 

[happygodavid]

I love my Switch and look forward to seeing where Nintendo takes it in the coming years. They did a great job with it, and it's one of my favorite pieces of non-Apple hardware. I'm glad to see Nintendo having success once again, and hope they can pull through this shortage. So far this thing is outselling the Wii, which was also supply constrained, but I think they're doing a lot of things right this time with the Pro controller, more grown up hardware and the most epic launch game ever.

Same here. I had an NES, SNES, N64, and Gamecube; I played Wii and WiiU a few times, but neither piqued my interest, so I stuck with Xbox and PC for gaming until the Switch. I just told some friends the other day, "I think the Switch might be my favorite piece of gaming hardware, ever." Granted, the game library won't be the same as other consoles or PC (lack of power, etc.), but so far, Nintendo has hit the sweet spot of having quality gaming on the go and at home. I still play my Xbox and PC, but every time I do, I think, "Man, I wish I could take this with me." I'm really glad to see Nintendo back in the game, and I am hopeful that the shortages of Switches are at least partially due to the fact that people just really want to buy the Switch.

 

[macduke]

Same here. I had an NES, SNES, N64, and Gamecube; I played Wii and WiiU a few times, but neither piqued my interest, so I stuck with Xbox and PC for gaming until the Switch. I just told some friends the other day, "I think the Switch might be my favorite piece of gaming hardware, ever." Granted, the game library won't be the same as other consoles or PC (lack of power, etc.), but so far, Nintendo has hit the sweet spot of having quality gaming on the go and at home. I still play my Xbox and PC, but every time I do, I think, "Man, I wish I could take this with me." I'm really glad to see Nintendo back in the game, and I am hopeful that the shortages of Switches are at least partially due to the fact that people just really want to buy the Switch.

Yeah, I was the same, NES through N64. In college my best friend had a GameCube and later a Wii and so I played that with him a lot, and eventually got my own Wii. Then Xbox 360 and One all the way. In recent years I've become a lot busier with my family and having kids, so I don't get to sit down and play as much. The closest I had gotten to a complete AAA game in recent memory was completing about two-thirds of Fallout 4. Since the Switch came out, I've put in over 100 hours in Breath of the Wild alone, because I can bring it with me to work and play on my lunch breaks, when I'm waiting in line somewhere, etc. It slips nicely into the side pocket of my small Incase brand iPad bag, so I often have it with me. I can also play it in bed before I fall asleep instead of what I would normally do—which is getting angry about the news or playing some stupid smartphone game.

People like to complain about the graphics but they're between the Xbox 360 and One and you can carry it with you anywhere. For people like me who grew up on truly slow hardware and was blown away by Ocarina of Time when I was a kid, games like BoTW look absolutely stunning. For me it's not so much about hyper realism as it is good quality game play, and what I've seen so far suggests Nintendo is returning to their roots while also keeping up with modern game play. Games will make or break the Switch, but if we get a dozen games half as good as BoTW, it's going to be a very successful console and might also be my favorite piece of gaming hardware ever. It's so much more simplistic than my Xbox One, and that alone is a breath of fresh air because it's not always glitching out. It really does seem more Apple-like than anything else I've used.

 

[WRChris]

I was able to get 2 switches without pre order, so I feel pretty good about myself. Until there are more games than Zelda and Mario kart ports I don't see why everyone wants one right now. Bring on the 720p ports of AAA titles and then you will see the switch market blow up. How many months will it take nintendo to release a freaking virtual console? Jeez Nintendo, here is my money, why don't you want it?
[doublepost=1496175609][/doublepost]

Same here. I had an NES, SNES, N64, and Gamecube; I played Wii and WiiU a few times, but neither piqued my interest, so I stuck with Xbox and PC for gaming until the Switch. I just told some friends the other day, "I think the Switch might be my favorite piece of gaming hardware, ever." Granted, the game library won't be the same as other consoles or PC (lack of power, etc.), but so far, Nintendo has hit the sweet spot of having quality gaming on the go and at home. I still play my Xbox and PC, but every time I do, I think, "Man, I wish I could take this with me." I'm really glad to see Nintendo back in the game, and I am hopeful that the shortages of Switches are at least partially due to the fact that people just really want to buy the Switch.

FYI, most modern triple a games run low res versions on 360 and PS3. The tegra chipset has more power than those machines so power is not a problem unless you are targeting 60fps at 1080p. There is literally no reason we can't have all AAA games running on switch with a lower resolution.

Anyone who tells you otherwise has no clue about "power".

Remember gta 5 runs fine on last gen hardware.
It's up to the developers to port and release these games on the switch.

If Nintendo releases a stupid iOS app for party chat and lobby setup, the switch is done.
[doublepost=1496176211][/doublepost]

Yeah, but that is part of what makes Nintendo successful. You have everything in the box to get going. The big appeal of the Switch is that you can play it on the TV or on the go. Dropping it in the dock is stupid easy. Also there was pretty big blow back in 2006/2007 when people started breaking their TVs and Nintendo had to retroactively send out better straps and bumper guards to do damage control. Leaving it out today could be a nightmare.

I love my Switch and look forward to seeing where Nintendo takes it in the coming years. They did a great job with it, and it's one of my favorite pieces of non-Apple hardware. I'm glad to see Nintendo having success once again, and hope they can pull through this shortage. So far this thing is outselling the Wii, which was also supply constrained, but I think they're doing a lot of things right this time with the Pro controller, more grown up hardware and the most epic launch game ever.

the pro controller is hands down the best gaming controller I've ever used!!!

 

[RiddlaBronc]

The iphone a more powerful device than the switch. Nintendo needs to focus on games for the app store and android

 

[thadoggfather]

Seems like they're using Apple as the scapegoat for reducing sales expectations

As others have mentioned, how constrained are parts they dont use the same fast SSD's that iPhones do, different pixel density/size screens/contrast, and Nvidia tegra SoC has nothing to do with Apple whatsoever

Maybe overlap in the gyroscope, i dunno