Nintendo’s Switch sales drop as it contends with chip shortage

Nintendo’s Switch sales fell significantly last quarter, dropping to 3.43 million units compared to 4.45 million during the same period last year, according to its earnings report. Software sales also fell to 41.4 million units compared to 45.3 million year over year. All that that resulted in an operating profit of 101.6 billion yen ($763 million), down from last year and short of what was expected. 

The company chalked up the Switch sales issue to a parts shortage, the same thing that bedeviled Sony during the same quarter. “Hardware production was impacted by factors such as the global shortage of semiconductor components, resulting in a decrease of hardware shipments,” the company said. It noted that the OLED model made up a large chunk of Switch sales with 1.52 million units sold, and the lower margins on that model dragged profit down a bit.

While game sales also dropped, Nintendo managed to boost the overall percentage of first-party games sold. In fact, it was the second best first quarter for first-party game sell-through since the Switch launched — second only to Q1 2021, which was fueled by Animal Crossing: New Horizons. All told, however, Nintendo would have to call the quarter a success considering that game buyers spent 13 percent less this year compared to 2021, according to Bloomberg

Some of that was aided by the launch of three key games, the company pointed out, particularly Nintendo Switch Sports which arrived on April 29th. Mario Strikers: Battles League launched on June 10th, while Fire Emblem Warriors arrived on June 24th. “More than 100 million users played Nintendo Switch in the latest 12-month period,” the company added. 

Nintendo is hoping that upcoming games will help out next quarter. Xenoblade Chronicles 3 just launched, Mario Kart 8 Deluxe – Booster Course Pass: Wave 2 arrives on August 4th, Splatoon 3 will be released on September 9th and you’ll see Kirby’s Dream Buffet sometime this summer. The company is also launching an OLED Switch Splatoon 3 Edition on August 26th. 

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Motherboard Prices Are Rising, But Don’t Blame Chip Shortage

It’d be easy to blame the ongoing global chip shortage on the rising prices of motherboards, but with Intel’s latest Z690 motherboards, there’s reason to think that a larger issue is causing the price increase.

An article by TechPowerUp makes the point that that there are a lot of features that need to go into these new motherboards versus previous generations, like PCIe 5.0, DDR5, and the new LGA 1700 socket.

First off, one of the biggest differences between LGA 1700, which is what we get in the Z690 chipset, versus the previous socket, LGA 1200, is the number of pins. In the LGA 1700 socket, we get 1,700 little pins within the socket, whereas we got 1,200 in the LGA 1200, which occupied the Z590 chipset. Logically, more pins means more materials, thus more money needed to produce.

The question is, how much more money can 500 more little pins be? The answer is not concrete, but according to TechPowerUp, it’s around four times more expensive than LGA 1200.

Funny enough, the price difference between the Z590 and Z690 chipset is just $1.

While the new SSDs are not ready to be dispersed, PCIe 5.0 is ready on the Z690 chipset, which adds a price increase of about 10% to 20% over PCIe 4.0. That big price increase is due to what pieces are needed to implement PCIe 5.0.

The higher-end Z690 motherboards, like the Asus ROG Maximus Z690 Hero, utilize DDR5 RAM, which has an entirely different operating procedure that needs to be brought into play during design.

We also cannot ignore the overall design of the CPU that is being inserted into these motherboards, which is Intel’s 12th-Gen Alder Lake CPUs. Alder Lake is utilizing many different features from what we’re accustomed to, like dedicated performance cores.

All of the new features of the Z690 chipset holsters are unique and we’ve yet to see AMD include these features. Unfortunately, this is just another sign of the times where PC hardware has become more expensive and inaccessible to gamers who want in.

Editors’ Choice

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Nvidia Finally Has Good News on the GPU Shortage in 2022

The current graphics card shortage has made it tough to be a PC gamer. However, Nvidia thinks there is a light at the end of the shortage tunnel. The company expects supplies to improve by the middle of 2022.

Nvidia Chief Financial Officer Colette Kress explained at the UBS Global TMT conference that the company has been successful in increasing GPU supplies during the shortage, according to PCMag. Specifically, Nvidia spent billions to shore up long-term agreements with various manufacturers. This due diligence should lead to more supplies to make graphics cards, thus decreasing the overall shortage.

Nvidia wants to wait until there is a “reasonable amount of supply” to lower prices.

“The company as a whole will take the appropriate work to continue to procure more supply,” Kress said. “We’ve been able to grow quite well during this year, each quarter, sequentially growing. And we do continue to plan to do that for Q4.”

Kress didn’t say exactly which manufacturers Nvidia made deals with, but Samsung is a likely one due to Nvidia’s Ampere architecture being built on its 8mn process nodes. Cress did point out that long-term deals take a while to have an impact. While the company would love to lower the prices, she said Nvidia wants to wait until there is a “reasonable amount of supply” to do that.

Time will tell if Nvidia is able to truly alleviate supply issues next year. Even Nvidia’s own CEO, Jensen Huang, believes that shortages will continue through next year. That said, Huang has extolled his company’s ability to source supplies from multiple vendors, combined with its ability to scale.

Outside of savvy partnerships with fabs, Nvidia is also trying to push the U.S. government for policy actions. Nvidia, along with other tech companies, are asking the Biden administration to exclude graphics cards from the former Trump administration’s tariffs on imports from China. The tariffs on semiconductors and printed circuit boards (PCBs) have at least partially contributed to the sky-high prices of graphics cards.

One of the ongoing problems with the shortage is with scalpers and cryptominers. About 25% of all GPUs sold during the first half of 2021 went to miners. Even if Nvidia manages to increase its supply, that doesn’t guarantee that scalpers and miners won’t scoop up the extra supply. Nvidia’s next-gen “Lovelace” graphics cards look to possess insane power, but it won’t matter if they’re just as scarce as the current-gen Ampere cards.

Editors’ Choice

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Why GPU Bundles Are Both Hurting and Helping the Shortage

GPU bundles have been one of the only ways to buy a graphics card in 2021, and they’ve been met with a mixed reception. Claims of endless profiteering and offloading undesirable products have run amok, painting retailers as nothing more than money-hungry entities that are capitalizing on a bad situation.

There’s a thread of truth to that, but after talking with market experts and retailers, I’m convinced that GPU bundles help more than they hurt. Although there isn’t a magic bullet to solve the GPU shortage, retailers can make cards easier to find by bundling graphics cards with other products.

Here’s why, and more importantly, how.

Why graphics card bundles make sense

Unless you have a local Micro Center or have been lucky enough to score a GPU at one of Best Buy’s in-store restocks, there’s one main way to buy a new graphics card in 2021: Through a bundle. Led by Newegg’s Shuffle lottery program, retailers have started selling graphics cards exclusively with other PC components or accessories.

Antonline is one example. It sells bundles of EVGA graphics cards along with other EVGA components and accessories at a slight markup (much less than the markup of graphics cards alone elsewhere). Newegg restricts all but the most expensive graphics cards to bundles, too, with many bundles exclusively part of Newegg Shuffle.

It’s easy to draw a conclusion here: Demand for graphics cards is still through the roof, and retailers are taking advantage of the situation by offloading products that may not sell on their own. That’s part of why we’re seeing GPU bundles, but it’s far from the full story.

Ted Pollak, senior gaming analyst at graphics research firm Jon Peddie Research, says that “bundling makes sense.” Scalpers and bots snatch up graphics cards quickly, and Pollak says that bundling can be an effective way to deter them from graphics cards. “Nothing can circumvent scalpers and bots, but bundling makes the economics much worse for people trying to flip product.”

Listings for the RTX 3080 on eBay.

It’s not just a matter of pointing the finger at bots and scalpers, though. The increased prices of GPUs have led gamers to seek out graphics cards to resell. Gamers likely don’t account for a large portion of the millions resellers have raked in through graphics cards. But if an extra graphics card is on the table, there’s an incentive for gamers to offload it for a profit.

“The retailers don’t really have control here no matter what they do on unbundled cards sales,” Pollack said. “Even gamers will take advantage of arbitrage situations, and if they can buy something for $500 that they can instantly sell for $850, they will do it.”

How to make a GPU bundle (without screwing over gamers)

GPU in neon lights.
Martin Katler/Unsplash

Bundling makes sense for graphics cards. It changes the economics enough to make GPUs less attractive to scalpers, and it removes the incentive for gamers to set up a GPU reselling business on the side. When I asked Catherine Comerford, chief merchandising officer at Antonline, if bundles are beneficial right now, she made it clear: “One-thousand percent.”

That doesn’t mean bundling is perfect. In August, Gamers Nexus published a detailed look at two Gigabyte power supplies that were bundled with graphics cards as part of Newegg’s Shuffle program. These power supplies had some major issues, which could lead to the power supply failing or, in the worst case, sparking and potentially causing a fire.

A dead power supply is bad enough. Worse, Newegg doesn’t allow returns on bundles unless the full bundle is returned. So, if you bought a power supply that failed, you’d be forced to send it back along with the GPU. This is a policy Antonline has, too. Every product page says that “only new and sealed complete bundles will be eligible for returns.”

GPU bundles on Newegg.
“All individual products in below combo must be returned in their entirety.”

It makes sense. Retailers would be destroying the benefit of bundling products together if they allowed individual items to be returned. The solution is to bundle products that are actually useful.

Comerford said that’s a focus for Antonline. Instead of bundling backstock, Antonline builds bundles with products that people may use — say, a power supply that’s rated for the card you’re purchasing or a few months of Xbox Game Pass for PC. Comerford said that Antonline is constantly changing its bundles, too, both in response to customers’ feedback and to confuse bots scraping the site.

Newegg isn’t as generous. At best, the company offers graphics cards with a motherboard or SSD. But if you frequent Newegg’s Shuffle program, you’ll often find cards bundled with a single stick of RAM, or a high-end motherboard bundled with a low-end graphics card. I’ve found PCIe 4.0 graphics cards with PCIe 3.0 motherboards, too.

There’s a tightrope for retailers to walk. GPU bundles are inherently opportunistic, so it’s important that they come with products that support the graphics card. Although Newegg bundles graphics cards with other PC components, they’re often disjointed or unrelated. For GPU bundles to work, they need more than other products the retailer has in stock.

They need to unlock a reasonable price, too. Bundles at Newegg, for example, are at most $10 cheaper than the price of the components on their own. And in many cases, you can’t purchase the graphics card alone. You have to pay the price Newegg could sell the card for on its own while picking up another component you may not need.

GPU bundles aren’t ideal, but they can offer a path for gamers to pick up a graphics card. The important things are that the bundled products are useful and that the price of the graphics card is lower than what the retailer could sell the card for on its own.

Getting back to normal

A Newegg warehouse.
Gary Friedman/Getty

The GPU shortage is a complex issue, and it’s impossible to know when you’ll be able to buy a graphics card at list price. Pollak told me that he expects things to return to normal in March 2022, “barring new virus or political problems.” The biggest hurdle is supply, though, and executives warn that supply issues may carry well into 2023.

GPU bundles may be around for a while, but that doesn’t have to be a bad thing. By bundling supporting products and working to balance the cost of the GPU, bundles can be an effective way for gamers to access graphics cards without paying the astronomical prices set by resellers.

Although there are still issues to work out, Comerford says everyone is working toward the same goal. “Everyone in this community is frustrated about scalper activity that’s happening, and everyone has the goal of getting products in the hands of gamers and real tech enthusiasts.”

Editors’ Choice

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Report: AI has assisted half of all business owners during the labor shortage

Hear from CIOs, CTOs, and other C-level and senior execs on data and AI strategies at the Future of Work Summit this January 12, 2022. Learn more

A new report from Unsupervised indicates that one in two business owners implementing AI say it has helped their business during the labor shortage.

As companies continue to see high turnover rates, business owners can benefit from AI handling the duties traditionally managed by human employees, especially if employers are struggling to hire new workers. According to the study, the top tasks that business owners are optimizing via AI include chatbots, content creation for emails and advertisements, and managing inventory.

However, if businesses increase AI implementation, they will also need to ensure they are properly staffed with employees who are trained and knowledgeable on their AI programs. The Unsupervised report found that 40% of business owners feel they are lacking in regards to having AI expertise on staff.

How are businesses using AI technology? The most commonly used AI technologies include natural language processing at 36%, robotic process automation at 22%, computer vision at 18%, deep learning at 16%, conversational interfaces at 15%, and physical robotics at 13%. The top three tasks that business owners are optimizing with AI include creating content for emails and ads for customers at 47%, chatbots at 44%, and managing inventory at 35%.

Above: The top tasks business owners are optimizing via artificial intelligence are content creation for emails and advertisements, chatbots, and managing inventory. Overall, 1 in 2 business owners using AI say it has helped their business during the labor shortage.

Image Credit: Unsupervised

While AI can complement human workers or “fill in” for certain jobs, it is crucial to have skilled professionals with holistic knowledge of the AI programs the business has implemented. If a perceived difficulty in hiring AI-trained professionals continues, business owners must quickly adapt with methods such as strategic hiring, streamlined training, or even outsourcing.

The notion of implementing AI for business needs is growing: 18% of business owners want to ramp up their use of AI in the future, and one in five are currently in the process of implementing AI for the first time. The trade-off is needing fewer employees capable of what AI can handle, but needing more employees skilled in AI programs.

Unsupervised used several data sets to examine the use of AI among businesses and capture the current AI and business landscape, including the 2021 AI Index Report, International Data Corporation, Deloitte’s State of AI in the Enterprise, and CB Insights, in order to explore AI startup funding. Unsupervised also surveyed 520 business owners about their attitudes toward implementing AI in their business via Prolific.

Read more in the full report by Unsupervised.


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Nvidia: GPU Shortage Will Continue to Rampage Through 2022

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Nvidia believes the global chip shortage won’t experience an improvement in the near future, with supply issues expected to continue throughout 2022.

The GPU giant’s CEO, Jensen Huang, shared his expectations on the outlook for next year’s inventory levels with Yahoo Finance. “I think that through the next year, demand is going to far exceed supply. We don’t have any magic bullets in navigating the supply chain,” he said.

Still, due to immense demand, the bottom lines for chip manufacturers have seen record highs. AMD, for example, recorded its best financial quarter ever in its third quarter of 2021.

Moving forward, Nvidia is seemingly also confident its financial performance will remain healthy.

“We have the support of our suppliers. We’re fortunate that we’re multi-sourced and that our supply chain is diverse and our company is quite large so we have the support of a large ecosystem around us,” Huang added.

While Huang doesn’t envision an end to the chip shortage next year, AMD CEO Lisa Su has a more optimistic view; she expects the situation to improve during the second half of 2022. However, Intel believes a supply-demand balance won’t be achieved until 2023 at the earliest.

The chip shortage has been compounded by recent supply chain issues that have shown no signs of improvement. Multiple industries have been severely impacted by the lack of inventory for products, most notably GPUs and gaming consoles. For both categories, scalpers have exploited the current state of affairs, which has inevitably resulted in considerable price increases across the board.

To make matters worse, due to the record highs seen in cryptocurrency lately, GPUs have become an extremely valuable commodity for miners, making it even more difficult for the average consumer to get their hands on a graphics card. One individual in particular was subject to a yearlong wait for his order of an RTX 3080, which was only expedited after he sent a cake.

Elsewhere, because of the component shortages, Valve’s highly anticipated Steam Deck portable gaming console has been delayed by months. Sony, meanwhile, was reportedly forced to reduce its PlayStation 5 production targets due to manufacturing limitations.

We’re well over a year into the GPU shortage, and given the general consensus on when it will last until, gamers will have to wait yet another year before supply issues normalize.

Editors’ Choice

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Texas Instruments Blamed As Root of Global Chip Shortage

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Explanations for the global chip shortage have been vague and varied, but a new report is shedding some light on the unexpected source of the shortage.

The report comes from DigiTimes, which claims that major tech companies are pointing to a singular cause for the global chip shortage — namely, the company Texas Instruments. That’s right, the company that makes the graphing calculators we all used in high school.

Texas Instruments does a lot more than make calculators these days. Taking a quick look at the Texas Instrument website, you’ll see that it offers a gargantuan amount of products, including PWM controllers, RGB LED display drivers, and more.

Most importantly, the company has made a name for itself as a manufacturer of analog chips, which help do things like regulate our computers’ voltage levels. These are small but vital parts of modern chip design that, according to some, are causing the holdup in production.

TSMC (Taiwan Semiconductor Manufacturing Company) is among the companies reported to be pointing the finger. TSMC is the world’s largest semiconductor company, and it makes chips for companies like Apple, AMD, Nvidia, and many others outside of the world of computing.

According to the report, TSMC says Texas Instruments, the market leader in these analog chips, is creating a bottleneck in providing access to these important components.

In a recent Reuters article covering the company’s quarterly earnings, the chief financial officer of Texas Instruments admitted that inventory levels were indeed low, causing the company to miss revenue goals.

While Texas Instruments’ production woes are likely not the sole “cause” of the global chip shortage, it’s a microcosm of how delicate supply chains can be. No one wants to take the blame, of course, but clearly the production shortage of a simple element can have wide-ranging effects on everything from the manufacturing of cars to your ability to buy an RTX graphics card or Playstation 5 this holiday season.

Some of the biggest voices in the industry have claimed the chip shortage could last throughout 2022 and even well into 2023.

Editors’ Choice

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Valve’s Steam Deck Delayed Due to Component Shortage

Valve’s Steam Deck has been delayed until February 2022, according to an email sent to people who placed a reservation on the handheld device. In the email, Valve apologizes for the delay and cites the global supply chain issues and material shortages that have been plaguing both consoles and GPUs since the start of the COVID-19 pandemic.

“Due to material shortages, components aren’t reaching our manufacturing facilities in time for us to meet our initial launch dates,” states the email sent to those with a reservation. The email did not provide information for those who want to purchase a Steam Deck but don’t want to place a reservation. The current backups in the global supply chain and issues with part sourcing and manufacturing will likely also push back the date of widespread availability for the handheld.

The issue affects all Steam Deck models, which were previously expected to begin shipping in December.

Valve notes that February 2022 is still an estimate, but it appears to be putting its faith in the new street date regardless. Those who reserved a Steam Deck will keep their place in the purchase queue, but the dates “will shift back accordingly” to start in February rather than in 2022.

Valve originally announced the Steam Deck in July. While the handheld’s form factor and design drew comparisons to the Nintendo Switch, Valve intends for the Steam Deck to be more like a portable PC. Players will have access to their entire Steam library of games on the go and will be able to play games with the Steam Deck’s built-in controller, as well as hook up the handheld to a TV or monitor to game on a bigger screen.

Editors’ Choice

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Nintendo Switch holiday stock shortage likely as company revises forecast

Ongoing chip shortages have impacted a number of consumer products, not the least of which is the Nintendo Switch. A recent report from Nikkei Asia claimed Nintendo has been forced to slash its production targets for the fiscal year ending in March 2022, which is bad news for anyone hoping to pick up a Switch OLED model for the holidays.

READ: Nintendo Switch Review

After the Nikkei report dropped earlier this week, a Nintendo spokesperson said the company was “assessing” the chip shortage’s impact on its business, though the statement didn’t go so far as to confirm any changes in its forecast.

Fast-forward to November 4 and a newly published Nintendo document titled “Notice of Full-Year Financial Forecast Modifications” that details a revision of the company’s outlook for the remainder of its fiscal year. According to the document, the reason for Nintendo’s forecast change is “based on the impact of Nintendo Switch hardware production” caused by the chip shortage, as well as “sales performance of Nintendo Switch software.”

Holiday shortages?

The forecast change all but confirms the news from earlier this week regarding chip shortages and related Switch production issues. What does that mean for the average consumer? Issues getting one of the new Nintendo Switch OLED models will likely persist through the holidays, particularly as demand increases and people move quickly to buy units before the Christmas shopping season is in full swing.

If you were hoping to get yourself or someone you care about a Switch, particularly the new OLED model, for the holidays, it seems like the best plan going forward is to shop early and keep an eye on inventory levels at your preferred retailers. Waiting until the last minute to pick up a Switch may result in waiting weeks past the holidays before it arrives, and no one enjoys getting an order confirmation under the Christmas tree.

Multiple options

Which Switch model should you buy? It may be easier to your hands on the Switch Lite if you’re desperate for a console, but think hard before making the jump. Though the Switch Lite is cheaper and easier to find, it also lacks some key features found on the larger models, particularly the ability to dock the console and play games on a TV.

Beyond that, Nintendo has officially released the Switch OLED model, which brings an improved display compared to the Switch model released a few years ago. If you’re planning to invest in Nintendo’s Switch ecosystem, there’s no good argument against springing for the Switch OLED (cost aside). This latest and greatest model packs a 7-inch OLED screen, “enhanced audio,” the companion dock with a LAN port, and 64GB of internal storage.

Check out SlashGear’s Nintendo Switch OLED review roundup for a variety of perspectives on the new model, as well as our 2017 Switch review (above) and an editorial on some key reasons you may want to avoid the Switch Lite.

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Nintendo lowers its Switch sales forecast due to global chip shortage

Nintendo has cut its Switch sales forecast due to ongoing semiconductor shortages, the company announced in its earnings report. It now expects to ship 24 million Switch units for the fiscal year ending March 31, 2022 instead of the 25.5 million units it had originally predicted. 

The issue came into focus this quarter, as Nintendo managed to ship just 3.83 million Switch consoles compared to 6.86 million during the same quarter last year. So far, its net sales for the year are down 18.9 percent to 624.2 billion yen ($5.46 billion) year-over-year. 

That’s not a huge surprise, however, as Switch and software sales exploded during the COVID-19 lockdown and following that has proved to be impossible — particularly as chips and components have since become more scarce. Today’s numbers don’t include any sales of the Switch OLED, as the earnings only provide data up to September 30th, a full week before the updated console arrived.

Despite the revised sales expectations, Nintendo expects to match total revenue of 1,600 billion yen ($14 billion) from the previous fiscal year, thanks in part to games. It aims to sell 200 million software units, 10 million more than last year, which would help offset the console sales drop. Upcoming titles include Pokémon Brilliant Diamond and Shining Pearl plus a Zelda-themed Game & Watch.

The most popular games so far this fiscal year include Legend of Zelda: Skyward Sword (3.6 million units sold), Mario Kart 8 Deluxe (3.34 million units) and Animal Crossing: New Horizons (2.22 million units). The launch of Metroid Dread came after the earnings period Nintendo is reporting today.

Despite the reduced expectations and tepid console sales this quarter, Nintendo has now sold 92.87 million Switch units to date. That’s still short of the Wii, which has the company’s current home console sales record of 101.63 million units shipped. However, if Nintendo comes close to matching the 11.57 million units sold during last year’s holiday period, the Switch — aided by the new Switch OLED model — could finally top that mark by the end of the year. 

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