According to people familiar with the matter, Nintendo has significantly reduced the production of Switch 2 game consoles due to sales falling short of expectations during the holiday season at the end of last year, especially the weak performance in the U.S. market. Nintendo plans to produce 4 million units of its flagship product this quarter, down about one-third from the original 6 million units, according to people familiar with the matter who asked not to be identified discussing undisclosed information. The production cuts are expected to last until April.
Since its record-setting debut in June last year, Switch 2 sales have failed to meet management's high expectations. Although the low-priced Switch 2, which is exclusive to the Japanese market and does not make money, has attracted strong demand, the US market has failed to see similar sales performance.
The successful release of the Pokémon Pokopia game has pushed Nintendo's stock price soaring, but management has not re-accelerated console production. People familiar with the matter said the company is waiting to see whether the popular game and other new titles can continue to attract consumers before deciding whether to increase production.
The production cuts are not expected to affect analysts' average forecast for Switch 2 sales of about 20 million units this fiscal year, people familiar with the matter said.
In addition, Switch 2 also faces cost pressures including rising memory chip prices. Although rising chip costs have prompted Nintendo to consider raising console prices, this is not the reason for this production cut. People familiar with the matter said the production cuts were mainly due to slowing consumer demand.
After the media reported the news, Nintendo's stock price fell by more than 5%.