A few weeks ago, reports indicated that Nintendo was starting to move some of its Switch console production out of China in order to lessen the impact of the US’s trade tariffs. Many other tech companies have been in touch with the US government in an effort to stop these tariffs from increasing but in the meantime, it looks like moves are being made, with a new report this week stating that Switch production is partially moving to Vietnam.
Currently, almost all Switch models are made in China under a contract with Foxconn. With Foxconn being one of the biggest manufacturing partners in the world, they do have production facilities outside of China and according to Nikkei, Nintendo Switch production will be partially moved over to production lines in Vietnam within the next few months.
Roughly 40 percent of Nintendo Switch units sold in 2018 were sold in the US, making it Nintendo’s biggest market. With that in mind, increased tariffs on units shipping in from China would have an adverse effect on pricing, which would need to rise in order to keep a profit margin in place. This in turn could hurt future sales numbers, making it a tough situation to be in.
Recently, Microsoft, Sony and Nintendo signed a joint letter to the US government calling on them to reconsider their plans for 25% tariffs on more products made in China, including games consoles. Their argument is that ultimately it will hurt profitability for the consoles themselves, hurt consumers due to higher prices and hurt developers because people will be buying fewer games. Other major tech companies like Apple have shared similar sentiments but so far, we’ve not heard about any major changes in the US Gov’s stance.
KitGuru Says: Nintendo isn’t the only company exploring new avenues for production in an effort to lessen the impact of increased China trade tariffs. We shall have to wait and see if this has any impact on the US government’s current plans.