Apple, other smartphone builders taking NAND that Nintendo needs for Switch production

Posted:
in General Discussion
Reports from the supply chain claim that Nintendo is suffering a component shortage for its popular Switch console, induced by Apple's need for the iPhone and other smartphone manufacturers.




First reported by the Wall Street Journal, Nintendo can't keep up with demand for the Switch because orders for Toshiba's NAND flash memory is exceeding supply industry-wide. Cited as major factors for the limited chip supply are Apple's production of the iPhone 7 and future unnamed models, other smartphone manufacturers, and data centers.

Asked for comment, a spokeswoman at Toshiba said that demand for the storage chips are "overwhelmingly greater than supply" at present. The situation is unlikely to resolve itself in 2017, according to Toshiba.

While Nintendo is no stranger to short supply at retail by accident or design, the company claims that it hopes to build 20 million units of the Switch before March 2018. Nintendo reportedly fears wide-spead "customer tantrums" should it lack available stock for the 2017 holiday season.

The Nintendo Switch launched in March, and is a touchscreen tablet with attachable controllers to the left and right of the screen. The device is set to feature integration with an official Nintendo app for iOS, though it is not yet available at launch.

The $299 console shipped around 2.74 million units in the first month of its launch, besting Nintendo's projections of 2 million units. It remains heavily constrained at retail. Nintendo shipped 13.56 million of its predecessor, the Wii U.
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Comments

  • Reply 1 of 31
    CelTanCelTan Posts: 44member
    " stole my NAND" - iThief...
    watto_cobra
  • Reply 2 of 31
    SpamSandwichSpamSandwich Posts: 31,401member
    Suuuuuure.
  • Reply 3 of 31
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    dws-2caliSoli
  • Reply 4 of 31
    Ha, ha! "But we *need* it! Come on, man!"
    SpamSandwich
  • Reply 5 of 31
    SpamSandwichSpamSandwich Posts: 31,401member
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    They'd be far better off (at least financially) if they focused 100% on software and abandoned their hardware, which they can barely manage anyway. Their Switch feels cheap and underengineered according to those who've used it.
    edited May 2017 cali
  • Reply 6 of 31
    dws-2dws-2 Posts: 238member
    I do not understand Nintendo. Their products seem to be hard to buy for years after release. Once or twice for 6 months or so is just the market catching them by surprise. This consistent shortage over time of so many products leads me to believe it's either some strategy (that I don't get) or else really, really bad execution. I tend to think the later, but I guess I'm not in their shoes, so I don't know.
    randominternetperson
  • Reply 7 of 31
    boltsfan17boltsfan17 Posts: 2,178member
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    Nintendo is incompetent when it comes to hardware sales. It's a poorly managed company. Nintendo can't even keep stock of the 3DS and it's not like sales are going through the roof. Same with the Switch. Sure it's popular, but doesn't come close to the PS4 in terms of sales. Sony didn't have any issues catching up to demand after the PS4 was released. 
    jbdragon
  • Reply 8 of 31
    calicali Posts: 3,495member
    This is gonna spawn those stupid "Nintendo is holding back supply so people can want it more" bulls*it.

    Suuuuuure.

    I can hear it coming.

    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    They'd be far better off (at least financially) if they focused 100% on software and abandoned their hardware, which they can barely manage anyway. Their Switch feels cheap and underengineered according to those who've used it.

    Nintendo makes about half their revenue from hardware.

    "those who are serious about software should make their own hardware"

    on top of that they are the only innovators in the console industry. %99 of everything offered by competitors was ripped off from Nintendo. They should have sued the pants off Sony and Microsoft for their lazy engineering. 

    Nintendo is a great company with idiots running it.
    examples:
    making these unnecessary "limited editions" that sell like hot cakes.
    NES cCassic not including a ditigal store for retro games. Easily a multi billion dollar opportunity.
    completely screweing the "Wii" branding and now they have nothing. This is like Sony dropping the "PlayStation" brand or Coca Cola changing their Coca Cola soft drink name to "switch".
    terrible ads.
    Bad product/software events often killing their own hype on purpose. An example is revealing Switch in some random commercial and having the keynote later. Imagine if Apple revealed their products a month before their keynotes?

    I used to be really into this company and their problems stick out like a sore thumb yet they do nothing about it.
    randominternetpersonravnorodomrazorpit
  • Reply 9 of 31
    boltsfan17boltsfan17 Posts: 2,178member
    cali said:
    This is gonna spawn those stupid "Nintendo is holding back supply so people can want it more" bulls*it.

    Suuuuuure.

    I can hear it coming.

    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    They'd be far better off (at least financially) if they focused 100% on software and abandoned their hardware, which they can barely manage anyway. Their Switch feels cheap and underengineered according to those who've used it.

    Nintendo makes about half their revenue from hardware.

    "those who are serious about software should make their own hardware"

    on top of that they are the only innovators in the console industry. %99 of everything offered by competitors was ripped off from Nintendo. They should have sued the pants off Sony and Microsoft for their lazy engineering. 

    Nintendo is a great company with idiots running it.
    examples:
    making these unnecessary "limited editions" that sell like hot cakes.
    NES cCassic not including a ditigal store for retro games. Easily a multi billion dollar opportunity.
    completely screweing the "Wii" branding and now they have nothing. This is like Sony dropping the "PlayStation" brand or Coca Cola changing their Coca Cola soft drink name to "switch".
    terrible ads.
    Bad product/software events often killing their own hype on purpose. An example is revealing Switch in some random commercial and having the keynote later. Imagine if Apple revealed their products a month before their keynotes?

    I used to be really into this company and their problems stick out like a sore thumb yet they do nothing about it.
    On the surface, it does seem like Nintendo purposely holds back supply, but I don't buy that. The reality is Nintendo is awful at managing hardware supply. 
    razorpit
  • Reply 10 of 31
    SoliSoli Posts: 9,270member
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    They'd be far better off (at least financially) if they focused 100% on software and abandoned their hardware, which they can barely manage anyway. Their Switch feels cheap and underengineered according to those who've used it.
    None of that has to do with your skepticism with Nintendo not being able to source NAND, which is not uncommon in tech. Apple has a long history of buying up both components and transportation that limit manufacturing and transportation of other vendors. This has an effect of reducing their sales which drives up their per unit cost from a lower EoS, while often driving up costs of the actual components and transportation itself.

    Here's one such article from a half-decade ago:

  • Reply 11 of 31
    jbdragonjbdragon Posts: 2,170member
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    13.5 million Wii U's? Popular? Apple sells about that many iPhones at launch on the first weekend. Nintendo is not a major player in this market. What they are buying is a drop in the bucket over others with much higher priority. Like Apple, Nintendo that hold back supplies to make it look like Demand is high. That's just beyond dumb. That just causes lost sales because people get tired of waiting around. They sell as many units as they can make and get out into the market. Nintendo having supply troubles, nothing new for them. They're a minor player this this stuff. it's a drop in the bucket to Apple's demand which is a far bigger contract being it far more money then anything Nintendo could ever hope. That's year after year, Unlike a game console which is the same for a number of years and so sales get less and less year after year. 13.5 million Wii U's is a joke. That's pretty poor. Worse then I thought. No wonder they were in a rush to get this Switch out into the market.
    edited May 2017
  • Reply 12 of 31
    SoliSoli Posts: 9,270member
    jbdragon said:
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    13.5 million Wii U's? Popular? Apple sells about that many iPhones at launch on the first weekend.
    Why would you compare any other CE to the iPhone—the most successful CE in the history—to determine whether it's popular or not? If millions of units costing hundreds of dollars isn't popular then you need to recalibrate. Even if you were comparing smartphones of the same class the Samsung Galaxy is popular even if it sells less than the iPhone.
    randominternetpersongeorgie01ravnorodomjohn.brazorpitpscooter63
  • Reply 13 of 31
    Maybe Apple is willing (it's certainly able) to pay a slightly higher price to get priority access to the supply.
  • Reply 14 of 31
    volcanvolcan Posts: 1,791member
    Maybe Apple is willing (it's certainly able) to pay a slightly higher price to get priority access to the supply.
    Apple probably pays less than other manufacturers because of the size of the order. If you were a manufacturer, you'd probably prefer to make one huge sale than to negotiate dozens of smaller ones. 
    ravnorodomwatto_cobra
  • Reply 15 of 31
    SoliSoli Posts: 9,270member
    volcan said:
    Maybe Apple is willing (it's certainly able) to pay a slightly higher price to get priority access to the supply.
    Apple probably pays less than other manufacturers because of the size of the order. If you were a manufacturer, you'd probably prefer to make one huge sale than to negotiate dozens of smaller ones. 
    That's how its been reported in the past, but not just huge sales, but huge sales long in advance at a time with prices are lowest. This is where Tim Cook is said to shine. I have to wonder where Apple would've gotten during the Steve Jobs era if not for Tim Cook.
  • Reply 16 of 31
    The Switch only has 32 gigs of internal storage. Are we supposed to believe that Apple is really using that many 32 gig chips I mean ... wait a second, yeah I guess all the entry level iPhones have 32 gigs now ... never mind, carry on.
  • Reply 17 of 31
    SoliSoli Posts: 9,270member
    The Switch only has 32 gigs of internal storage. Are we supposed to believe that Apple is really using that many 32 gig chips I mean ... wait a second, yeah I guess all the entry level iPhones have 32 gigs now ... never mind, carry on.
    The size of the finished chips don't have to be comparable. I think all NAND is still sold as individual units still in mebibit sizes that are then packaged into various chips sold to CE vendors in gibibyte sizes.
  • Reply 18 of 31
    maestro64maestro64 Posts: 4,658member
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    Slight correction, Nintendo has history for creating artificial product scarcity which drives demand for their product and keeps consumers from going to the competitor products, Everyone wants what they can not have and what everyone is looking for. This should sound familiar, Apple plays this games very well, probably better than Nintendo.

    I do believe Nintendo is having supply issue, memory always goes through these cycles, this is why it is very important to have strategic relationships with your memory suppliers and not play a price game with you supplier. If Nintendo is having this issue you can better the low end cell phone Apple is not playing the price game, because the are not in the race to the bottom so their supplier will always make sure they get what they need.

  • Reply 19 of 31
    SoliSoli Posts: 9,270member
    maestro64 said:
    Suuuuuure.


    What do you mean?

    Unfortunately, Nintendo has a long, consistent history of creating very popular products but not being able to keep up with demand.

    Everyone wants what they can not have…

    But selling an actual product is how you profit. 

    This should sound familiar, Apple plays this games very well, probably better than Nintendo.

    Apple will sell a quarter billion iPhones this year and demand will be scarce for many months after launch. There is nothing fabricated about Apple's demand.

  • Reply 20 of 31
    georgie01georgie01 Posts: 265member
    ... Their Switch feels cheap and underengineered according to those who've used it.

    I have a Switch and think it's an excellent product. It doesn't have the feel of a high end metal/glass mobile device, but that doesn't make it cheap. I think the performance is plenty adequate and the value of its portability is understated—it's fantastic to think I can easily bring and play real console games with me when I travel.

    jbdragon said:

    13.5 million Wii U's is a joke. That's pretty poor. Worse then I thought. No wonder they were in a rush to get this Switch out into the market.

    I'd be extremely happy if I had a product that sold 13.5 million units (+millions of games), and I think you'd be happy too. Relatively low selling products do not make them bad or unsustainable. In reality the Wii U was a decent system with some awesome games despite the weird and badly timed GamePad, not to mention the confusing name.

    Solirazorpit
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