It was told with the help of this story Supply chain diveA prize winner publication for news and trends shaping supply chain management.
When nintendo Unveiling details On April 2, about its much awaited switch 2 console, very little was that this day would be a significant twist in global business.
Sports industry veteran showed the successor to his hit switch console, President Donald Trump’s successor Planned To apply universal mutual tariffs.
Trump called for 10% on several countries and basic tariffs of higher duties, immediately sowing uncertainty for the launch of 5 June of Switch 2.
Japan-based Nintendo currently produces several American-bounds in Vietnam, with some other production in China, according to Daniel Ahmed in Nico Partners.
Under the announcement of the original mutual tariff of the Trump administration, imports from Vietnam under the original mutual tariff of Trump with 46% tariff – between the highest rates of any country – would have been hit with 46% tariff.
Since Trump’s announcement, the US stopped some duties and provided exemption for some product categories, even reaching it 90 days truss with ChinaWhich was facing tariff rates of at least 145%at one point. While both countries have reached since then A deal structureEarlier this month, Trump said Trump said that imports from China will still be subject to 55% tariffs under the proposed treaty.
Between the upheaval, Nintendo went with his June 5 launch date. But this question arises: How has the ups and downs in business relations affect the company’s American rollout? And what challenges may be faced in future?
A controlled launch
Despite this Some non-tariffs related hiccupsThe initial rollout of Switch 2 has been successful, Selling more than 3.5 million units According to Nintendo, its first four days on the market.
Despite the nintendo, many console was secured through pre-order Initially delay In response to the new tariff unveiled by the Trump administration in early April. The break-the company picked up on 24 April-although there was a short-term drama.
Joseph Fitzgerald, managing director and partner of Boston Consulting Group, said, “Just stop the pre-order, but is not doing anything else, just buys time to inspect you.”
Although Nintendo proceeded with its plans after pre-order poses, many consumer commodities companies are taking more long-term waiting-and-looking approach with tariffs. Some stockpiling inventory To delay more rigorous tasks.
It is not clear how Nintendo handled the initial tariff shock beyond the pose, as the company did not respond to the request for comments. However, according to Sally Peng, FTI consultation may have created a fixed amount of switch 2 inventory before launch to ensure export control, restrictions and senior managing directors of exports and businesses to the Asia-Pacific sector.
Strategic
However, there is no quick improvement for consumer electronics manufacturers such as nintendo to overcome the effect of tariffs.
According to Fijarld, it would be quite challenging to transfer the production operation of the same company. He said that it takes about nine to 12 months to transfer production to separate geography, and it is just the beginning. He said that companies often want to use a feature for five to 10 years to believe that it can meet sufficiently demand and quality standards for equipment such as switch 2.
Despite the level of complexity required to move production, consumer electronics manufacturers in North America have put “calories” into imbalance, Fijarld said. The most noteworthy places include countries in Southeast Asia beyond Latin America, Eastern Europe and China.
Production in the US is another option, but complications still persist when a company like Nintendo had to invest in such a step.
“You finally around this discussion, hey, you can also mirror our supply chain in this location, or you are going to continue to provide from outside the United States, and what is our cost difference?” Fitzgerald said.
It is quite challenging to transfer its production footprint of a company. But game console manufacturers rely on thousands of components and coordinate with large fellow ecosystems to create devices that can be sold at consumer -friendly prices.
“That is the biggest thing in Tier 2, Tier 3 alignment these places that when you are vaccinated in policy, this is the biggest thing.”
The total supply chain cost of various tariff strategies will determine that long -term gambles electronics manufacturers create a shifting global business environment. These line items include purchases, logistics and labor costs.
“So, if we see these three costs together and together as a landed cost, it would be very healthy to take our decision in the time of uncertainty, which is like an understanding of the year,” said Peng of FTI.
According to Peng, this type of supply chain is some exemplary to successfully complete the rutoling, which exposed the apparel and shoes as a region that is ahead of many other industries in this regard.
“Many years ago, they had already discovered that there is a large part of their total costs other than labor costs, duty costs or tariff costs,” Peng said.
The real challenge comes forward
Although Nintendo faced the tariff attack during the launch of switch 2, the actual test for the first year of the console lies in the coming months.
Like the manufacturers of other consumer goods, nintendo will need to bring orders during the summer peak shipping season to prepare for a holiday. Due to the current trade environment, this would mean that the current tariff reprives of the Trump administration will have to be ordered to either ordered to eat high shipping costs when the current tariff is currently stopped.
Image by Joe Rodle through Getty Image.
The holiday season runs hardware and software sales for video game industry. Sales are responsible for 37% in the financial quarter ending December 31 Nintendo’s global sales in 2024Calculation per supply chain dive. About 60% of the US revenue for the company, which does not publicly reports regional income, comes from sale at the end of the year, Regi Files, President of former US Nintendo Said in 2018,
Nintendo is expecting To sell 15 million units Switch 2 in the next eight months. But to reach that mark, he must struggle with the possible return of the Trump administration’s country-specific mutual tariffs next month to meet his American sales forecast.
Tariffs on imports from China have been reduced by mid-August, while other country-specific duties are stopped by the beginning of July. Even with the Raprive Window, due to which the shipment has a pickup, imports are expected to fall in June by 6.2% in June and 8.1% yoy in July. National retail federationThe rest of the year is expected to cut even more rigorous cuts.
By reducing shipment due to high tariff or slow demand, according to the peng, there will not be a silver lining of the costs saved for the nintendo. Peng said that the new console rollout plans already that the company already has material to produce more console. Meanwhile, the production in China and other countries in Southeast Asia, targeted by Trump’s tariff, slowed down in the first half of 2025, he said.
“So, we are not just talking about the finished goods that they are not able to ship. They already drown a lot of costs to prepare the material or secure the material,” Peng said.
Given tariff-powered uncertainty, nintendo and other consumer electronics manufacturers are being forced to take atapical decisions during this time of the year.
“How aggressive I am in the case of chasing back orders? And am I only planning to meet the supply for 30 days at a time, which naturally limits my maximum capacity that I can complete,” said Fitzgerald. “So any launch, I will agree, a long backlog is the period of fulfillment because companies are going with inch in that supply process due to uncertainty.”
Possible Nintendo Benefits
Nintendo has been convinced in his ability to meet the demand Production challenges faceEven tariffs continue to rank supply chains. While in Vietnam and China, there is no immunity to duties in view of its production footprint, as well as being a Japan-based company, Nintendo has a unique position in the video game industry.
Since the success of Nintendo with Wii Console, the first time was introduced in 2006, the company separated from its leading contestants (Microsoft and Playstation) with a separate development strategy.
In the last two decades, Nintendo has removed processing speed and graphical fidelity for unique hardware mechanics such as speed control and portability. This approach is part of a more family-centered product strategy for Nintendo. In contrast, Microsoft and Sony mainly continue to target 18–34 demographic.
Due to its strategy- and its video game console is generally an underlying demand conservation, even though tariffs fuel high prices. Nintendo has It is committed to the price of $ 449 at the beginning For Switch 2, but it said that console goods will experience value adjustment due to “changes in market conditions”.
“Video games are unique because only one of that platform is one, okay? And you are not really competing (with other businesses),” Fijarld said. “They are a category of one for themselves.”
This is especially true for Nintendo, whose best-selling first-sided sports are exclusive to its console. Meanwhile, Sony and Microsoft have released the first-party titles on other platforms.
Furthermore, because the console of the nintendo is not on the same cycle as the Tal Xbox and Playstation, which often launch new generations at the same time. Therefore, it can stand alone among the three larger console manufacturers this year.
Game developers and supply chain dives are sibling organizations under Informa Techtarget.
