Nintendo Lowers Sales Forecast On Chip Supply Issues

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Nintendo lowers full-year sales forecast for Switch gaming console as it becomes latest company hit by disruption in semiconductor industry

Nintendo has lowered the expected sales of its Switch handheld gaming console by about 6 percent, due to production cuts caused by the worldwide semiconductor shortage.

The company said it now expected to sell 1.5 million fewer Switch consoles than it had earlier planned by the end of its financial year, which concludes in March 2022 – 24 million units, down from 25.5 million.

The Kyoto-based company added that the impact of Covid-19 and the semiconductor shortage create “a state of continued uncertainty, with the possibility of future impact on production and shipping”.

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Nintendo is the latest firm to be hit by supply chain issues that have disrupted production of everything from consumer electronics to automobiles.

The company said it was raising its expected sales of gaming software by 5 percent to 200 million units for the full financial year.

Nintendo held its overall forecast for net sales, while raising its guidance for operating profits for the full financial year to 520 billion yen ($4.6bn, £3.4bn).

The firm was one of the big winners of 2020, when pandemic lockdowns around the world turned its game “Animal Crossing: New Horizons” into a smash hit and “drove the entire Nintendo Switch business significantly”, Nintendo said in a statement.

Following that boom, sales fell about 19 percent in the six months ended in September while profits slumped 25 percent.

‘Extreme’ delays

ARM chief executive Simon Segars told the Web Summit conference in Lisbon last week that the gap between supply and demand in semiconductors was “the most extreme” he has ever seen, with waits of up to 60 weeks for chip supplies.

Apple chief Tim Cook recently told investors that “larger than expected supply constraints” in the three months to September had cost the company $6bn in lost sales.

Forrester analyst Glenn O’Donnell said the constraints are likely to continue through next year.

“Semiconductor chips have become the basic ingredient in a wide variety of products – home appliances, consumer electronics, and toys are all affected,” he said.

“Even Apple struggles to get these essential parts. An ample supply of chips will not come until well into 2023, perpetuating the electronic supply chain for another two years or so.”