Offering yet another example of the trade war will inevitably drive more companies to move manufacturing out of mainland China and to Taiwan or Vietnam instead, Nintendo is shifting production of one of its most popular gaming consoles to limit the impact of US tariffs.
The Nintendo Switch
Per WSJ, Nintendo is moving some of its production of its Switch hand-held console to Southeast Asia from China to limit the impact of US tariffs on Chinese-made electronics. This comes as the company plans to update the popular Switch console with two new models later this year.
Since videogame console makers tend to sell their devices at thin margins, in the hopes of earning higher profits on sales of more lucrative games, the move suggests Nintendo is trying to avoid selling its Switch handheld consoles at a loss. Over the next two holiday seasons, Nintendo is facing stiff competition from Microsoft, with both companies offering competing devices.
The fact that Nintendo’s decision comes just a day after a senior Foxconn executive said Apple’s biggest manufacturing partner had the capacity to move its production outside of China presents an interesting and important message about how quickly global supply chains will change as the trade spat with China intensifies, said Bill Blain of Mint Partners.
Presumably, it’s a sign that companies aren’t waiting around to see if Trump and Xi manage to come to an amicable solution in Japan later this month. Many are already assuming the trade spat between the world’s two largest economies will persist for months, if not years, and that the US will eventually slap tariffs on the rest of the roughly $300 billion in Chinese imports that haven’t already been impacted.