Supply chain disruptions also slashed sales of rival Sony Group’s PlayStation 5 consoles by 26% to about 200,000 units, spurring concerns that the companies risk missing out on a holiday-season opportunity at the end of the year.
Switch sales totalled about 840,000 units in Japan in the just-ended quarter, according to video gaming data provider Famitsu.
“The shortage of chip materials is having an impact on production,” said a Nintendo spokesperson Tuesday. The April-June total represented a decline of about 10% from the 2020 level.
Although the company has not disclosed details, it is believed to be having trouble procuring parts for Bluetooth wireless communications components used in the controllers and main units as well as analogue chips for controlling currents.
Nintendo is having negotiations on procurement but “the outlook is uncertain”, the spokesperson said. The company, which fully outsources parts production and machine assembly, is battling smartphone manufacturers and carmakers over the vital components.
Summer is typically a time when game console companies ramp up output ahead of the holiday season, and insufficient production will mean lost sales opportunities.
Nintendo aims to sell some 21 million units of the Switch family globally for the year ending March 2023. But this target assumes parts supplies are at a certain level, president Shuntaro Furukawa warned at an earnings briefing in May.
The company will modify the Switch’s design to tap available parts, but the sustained supply crunch is certain to force Nintendo to revise down its net profit forecast of ¥340 billion (US$2.5 billion) for this fiscal year, already a 29% drop.
Famitsu estimates console sales based on data from volume and other retailers, and its forecasts tend to be close to official numbers from companies. According to Nintendo, Japanese sales account for a fifth of global sales.
Demand remains robust for the Switch, the latest version of which features organic light-emitting diode displays. Retailers in the suburbs and rural areas in particular are running out of stock. “If we can increase purchases, we can sell more,” said a spokesperson at a retailer.
The shortage of Switch systems deals a particularly severe blow to Nintendo. The company is preparing a couple of big software debuts this fiscal year, including Splatoon 3 in September and the latest Pokemon game in November. “The software lineup is so attractive that sales records may be broken,” said Hideki Yasuda of Toyo Securities.
Meanwhile, the PS5 shortage bodes ill for Sony Group. “They remain unavailable to buy, and some top-tier game fans are shifting to computer games,” Yasuda said.
Sony Group expects PS5 sales to come to about 18 million units for this fiscal year, up 57% on the year. The target is a downgrade from an initial forecast of more than 22.6 million.