A new report from The Wall Street Journal published this week during E3 2019 reveals some new details about Nintendo’s rumored new Switch models. Specifically, the report states that Nintendo has decided to move production of the new systems to Southeast Asia instead of China over concerns about potential United States tariffs on electronics made in China.
As we reported previously, President Trump’s proposed import tax rate of 25 percent would span video game consoles, as well as smartphones and computers. In theory, this could lead to price increases on game consoles–from Nintendo, as well as Microsoft and Sony–as companies pass on the cost to consumers.
Game consoles are not historically where the money is made in the games business. Oftentimes, systems are sold at a loss, with profits instead coming from software and services.
Should the 25 percent tariff go into effect for Switch consoles shipped into the United States, that would impact how much money Nintendo–and other companies–make on console sales. Nintendo has been the outlier in this area, however, as the company maintained from day one of Switch sales in 2017 that it makes money on each console sold.
If the 25 percent tariff goes into effect, that could cut into the Switch’s profit profile, which is likely why Nintendo has elected to move production of the console outside of China.
According to WSJ’s report, Nintendo has already moved production of the existing Switch model, as well as the two new rumored ones, to Southeast Asia. Regarding the new systems, one is said to have a similar form factor to the existing model but feature better components, with the other expected to have a different look and lower specs that make it less expensive. Given the systems are now reportedly in production, they could release soon, WSJ said.
Nintendo declined to comment on the report when approached by WSJ.
It’s unclear when Nintendo may announce the new Switch models, if they are indeed real. The company said before E3 that it would not announce the new systems during E3. Instead, Nintendo made a series of software announcements, including The Witcher 3 for Nintendo Switch and a sequel to The Legend of Zelda: Breath of the Wild.
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