Nintendo adds Sharp as assembler

TOKYO: Nintendo Co has added Sharp Corp as an assembler of its Switch console, according to people directly involved in the matter, as it works to stabilise production and hedge against United States-china trade tensions.

The video game giant has struggled to produce enough units for most of this year as the hit game “Animal Crossing: New Horizons” and stuck-at-home consumers fueled demand.

While the coronavirus outbreak hurt production early on, Nintendo president Shuntaro Furukawa said this month that output had returned to normal and the Switch is now made in Malaysia, in addition to existing China and Vietnam locations.

Nintendo’s main assembly partner Foxconn Technology Co, a key unit of Foxconn Technology Group, owns a Sharp stake and helped connect the two Japanese companies, they added.

Sharp continues to operate separately from its Taiwanese owner and its stock will be added to the Nikkei 225 Stock Average next week after a four-year absence.

Nintendo asked Foxconn Tech during the Donald Trump era to provide alternative manufacturing sites outside of China to hedge against the trade war, according to one of the people, and the company ended up directing some Switch orders to Sharp as the Japanese company had extra capacity in Malaysia.

The production volume in the South-east Asian site is limited, the person said.

Nintendo’s Furukawa has said those assembly lines aren’t yet running at full capacity and the first batch from them is about to hit store shelves soon.

A Sharp representative declined to comment, while a Nintendo spokesman declined to confirm any details beyond the president’s earlier public comments.

Switch assemblers plan to operate at maximum capacity through the end of this year, eschewing the typical December lull that follows the fulfillment of holiday demand.

That suggests Nintendo, in the current quarter, may end up shipping more than the 10.8 million Switch units it managed in the October-december period last year.

Nintendo has been diversifying its supply chain since before the Covid-19 era and its chief said at this month’s press conference that the Malaysia addition is part of the effort.

Osaka-based Sharp has a history of working with Nintendo, having once assembled the Famicom console and later provided key components for the 3DS handheld device.

The bulk of Switch production continues to be handled by Foxconn Tech in China.

Switch sales momentum kept up in October, according to the Nintendo president, and the hotly anticipated debuts of new consoles from Sony Corp and Microsoft Corp this month were marred by severely limited launch-day supplies.

Nintendo is expected to raise its fiscal-year sales target from the current 24 million when it next reports quarterly results. —