According to a new report from Bloomberg, Nintendo plans to have enough stock at launch to meet demand. According to the latest customs data provided by NBD, Hosiden Company, one of the three main assemblers of Switch 2 in Vietnam, shipped a total of 785,700 units in February, of which 725,200 units were shipped to the United States, which is more than the past six months combined.
With the threat of tariffs on hold, Nintendo can focus all of its production capacity in Vietnam on supplying the U.S. market, suggesting millions of consoles could be shipped out of the country in time for their June launches.
As for the impact that post-launch tariffs may have on the price of Nintendo Switch 2, there is more uncertainty. According to Bernstein analyst Robin Zhu, if tariffs remain at 10%, Nintendo may maintain its announced price of $499.99 and sacrifice some profit margins. This is done because the company wants to ensure that the system thrives, thereby expanding its user base and making its diversification strategy around iconic IP more successful. However, if the tariff increases to 46%, the price of the console is expected to increase by $50 to $100.
Taking into account the latest developments, pre-orders for Switch 2 in the United States and Canada should open soon, in preparation for the June 5 release. However, not all Nintendo fans around the world will be able to get their hands on the console on that day, as its domestic release has been postponed indefinitely.
Original text from Bloomberg:
The suspension of the most punitive U.S. tariffs in a century has given Nintendo a valuable window of time to prepare for its momentous June launch of its new console and temporarily eased pricing pressure.
The 90-day tariff grace period applies to most U.S. trading partners, giving the Japanese company an opportunity to increase Switch 2 shipments to the U.S. market, which accounts for more than a third of its sales.
About one-third of Switch 2 units are assembled in Vietnam and would have faced 46% tariffs as originally planned, but now only face the 10% general tariff imposed by the Trump administration. Nintendo can make full use of this capacity to focus on the U.S. market and stockpile as much inventory as possible over the next three months.
The company is gearing up for what is expected to be the largest console launch in the industry. According to customs data provided by NBD, Hosiden, one of the three major Switch 2 assemblers, shipped more devices from Vietnam to the United States in February than in the previous six months combined. That suggests Nintendo was able to mobilize stock of millions of consoles from the Southeast Asian country in time for the June launch.
It is worth noting that data shows that starting in January, almost all of Hosiden’s products were sold to the United States, compared with about 11% to two-thirds in the previous 12 months. Shares of Kyoto-based Nintendo rose 12% on Thursday.
For Nintendo, there is no Plan B other than the $450 Switch 2; a console that will soon become a key platform for its popular game series. Nintendo is diversifying its business into movies, merchandise and theme parks to better leverage its rich library of intellectual property (IP) and beloved characters, but to do so it must have a thriving platform and an ever-expanding user base.
Robin Zhu, an analyst at Bernstein, said: "If the tariff remains at 10%, Nintendo may maintain the price of $450, and the profit loss will be borne by the company itself. If Vietnam's tariff reaches 46%, I expect they will increase the price by $50 to $100."
Nintendo has delayed pre-orders in the U.S. to fully assess the impact of the new tariffs - which were announced just hours after Nintendo held an online conference to announce the Switch 2 price and launch game lineup. The company has spent months strategizing for the console's global launch and ensuring that the first batch of units gets into the hands of gamers and not scalpers. For example, the company prioritizes customers who have a SwitchOnline membership and plenty of gaming time on the Switch. .
Like movie premieres, the initial launch window for game consoles is crucial. It can spark interest beyond the loyal audience and lay the foundation for a flagship game to get off the ground quickly. Sony Group Corporation released the PS5 at the end of 2020, but it took several years to accumulate market momentum due to the impact of the epidemic on logistics and supply.
Today, Nintendo may face similar challenges shipping from Vietnam, which is also home to major exporters to the U.S. such as Nike and Adidas. Although Vietnam and the United States have begun negotiations to avoid rising tariffs, most companies are likely to accelerate shipments to the United States within 90 days to ship as much goods as possible.
U.S. tariffs on imports from China were raised to 125% as part of Trump's reversal of certain tariffs on most other countries on Wednesday. That makes it cost-prohibitive for Nintendo to ship its products made in China to the United States, while also posing a challenge for its competitors.
Toyo Securities analyst Hideki Yasuda said: "We estimate that the bill of materials (BOM) of Switch 2 is about US$400, which means that even under the 10% tariff, Nintendo will still lose money selling consoles in the United States, but this loss is something Nintendo can bear. Sony is in a more difficult situation because most of its PlayStation production is in China and may be forced to increase the price of PS5 in the US market in the future."
Personal computer (PC) makers demonstrated one way to deal with tariff uncertainty in the first quarter: stockpiling inventory in the United States and eliminating discounts. Nintendo, which plans to sell the Japan-exclusive version of Switch 2 for less than $350, may make every effort to avoid further price increases.
The price of Switch 2 has already increased compared to the original Switch. In addition, Nintendo also announced its first console game "Mario Kart: World" for $80. Nintendo is under pressure to persuade players to pay more for the device and software, while rising production costs have pushed up software prices.
The U.S. tariff threat remains, but at least the situation surrounding the Switch 2 launch window is now clearer. That brought Nintendo's stock price in Tokyo trading back to within 1% of where it was before Trump's "Emancipation Day" speech, which sparked a strong reaction in global markets.