As expected since its launch, the Nintendo Switch continues to perform really well with its sales. Reports have even confirmed that the new console has already exceeded the company’s sales expectations. It was projected that Nintendo’s new game system will soon surpass its previous model. Fans of the game company have been very happy with the immense third-party support and excellent first-party games. The device’s amazing market impact should supposedly bode well for all parties involved, but it seems that one of their parts suppliers has encountered some difficulties.
Nintendo Switch success, not for everyone
According to reports, the supplier detailed is Japan Display Incorporated. Nintendo currently sources their console’s touch screens from them exclusively. With a net loss reported worth 31.5 billion Yen last quarter, which is around $283 million. As of now, it looks like the company might have to consider the option to merge with other companies in order to stay afloat. Moreover, Japan Display Incorporated is expected to lay off an estimated 30 percent of its current workforce, which would be around 3,700 of its employees who will lose their jobs.
Financial analysis reveals reasons for their losses
Despite the above-average sales performance of the Nintendo Switch, the manufacturer still incurred losses.
Industry analysts noted that the supplier also provides display components for another big name brand. Due to some technical decisions made by their other deals, Japan Display Incorporated lost a significant source of income. Experts speculate that the touchscreens intended for the game console are being sold relatively at a low price.
Therefore, their profits might not be enough to keep their operations afloat.
Inadequate supply problems were foreseen
Last year was a big disappointment for consumers as the company struggled to keep up with the demand for their retro game system. The NES Classic Edition was the hottest item on everyone’s shopping list for the holiday season.
Yet, problems with restocks have left a lot of consumers without a system. It is not yet clear if the display manufacturer’s financial problems might cause production issues for Nintendo. However, they would obviously end up short if certain components are not available,
Currently, everyone is still having a hard time securing their own Nintendo Switch. The Japanese firm should start looking for alternative suppliers just in case their current one falters. Analysts have already predicted that the demand will only grow bigger as the holiday season approaches. They would not want a repeat of last year’s supply fiasco.
