TOKYO – Nintendo is shifting some production of its Switch videogame console to Southeast Asia from China to limit the impact of possible United States tariffs on Chinese-made electronics, said people who work on Nintendo’s supply chain.
It was another example of manufacturers adapting to the tariff threat. Taiwan’s Foxconn Technology Group said Tuesday that it was ready to move assembly of Apple Inc.’s iPhones out of China if necessary, and Japan’s Sharp Corp., which is controlled by Foxconn, said last week that it planned to move production of personal computers to Taiwan or Vietnam.
Kyoto-based Nintendo has traditionally relied on the Chinese factories of contract assembly companies to make its videogame hardware. That includes the Switch console, introduced in 2017.
The Wall Street Journal reported in March that Nintendo planned to update the Switch this year with two new models.
One is set to look similar to the current model with beefed-up components, while the other is expected to be a less-expensive model with a new look.
People involved in the supply chain said production in Southeast Asia has started for the Switch, including the current type and the two new models, suggesting Nintendo is getting ready to introduce them soon.
They didn’t give specific volume figures but said Nintendo wanted to have enough units to sell in the US, the largest market for videogame consoles, when the new products go on the market.
A Nintendo spokesman declined to comment on possible new models. Regarding production of the Switch, he said the console is now mostly made in China and that the company is always exploring options for where it assembles its products.
The US increased import tariffs last month on $200 billion of Chinese goods to 25 percent from 10 percent and proposed placing tariffs on an additional $300 billion of Chinese exports.
The new batch of tariffs, if made final, would likely cover smartphones, videogame consoles and computers.
However, they might not be adopted if tensions ease between the world’s two largest economies.
President Donald Trump and Chinese leader Xi Jinping are set to meet in late June in Osaka, the center of the Japanese region that includes many electronics makers including Nintendo and Sharp.
Videogame platform owners tend to sell hardware at a thin profit in hopes of earning revenue from more-lucrative software sales. If Nintendo had to pay a 25 percent tariff to import its consoles into the US, it might be forced to sell them at a loss – something the company has said it wants to avoid.
For the Switch, the latter half of 2019, including the holiday season, is a key period to lock in sales because competitor Microsoft Corp., maker of the Xbox One, is planning a next-generation console for the 2020 holiday season. Analysts say they expect the new less-expensive model of the Switch to sell for about $200, down from about $300 currently, to propel sales.
Ahead of the E3 videogame expo in Los Angeles, Nintendo released a video online Tuesday showing new games for the Switch system, including titles in the “Legend of Zelda,” Pokemon and Marvel franchises.