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Nintendo Co. has turned to Samsung Electronics Co. to help build the main processors for the Switch 2, a move that may allow the Japanese firm to increase manufacturing of the game console enough to sell more than 20 million units by March 2026.
According to persons familiar with the case, the decision represents a significant victory for Samsung, which is attempting to compete with Taiwan Semiconductor Manufacturing Co. (TSMC) in the production of chips for the global electronics industry. Securing a contract for one of the summer's most popular new devices is anticipated to increase utilization or business for the Korean conglomerate's semiconductor foundries.
The Korean company is currently working on a special chip or CPU created by Nvidia for the Switch 2 utilizing its 8-nanometer node, according to the sources, who requested anonymity since the topic is confidential. According to the sources, Nintendo's production rate should be quick enough to ship more than 20 million consoles by March of next year. Samsung can scale manufacturing further if necessary, but much depends on capacity at hardware assemblers such as Foxconn Technology Group.
Samsung, which already provides memory chips and screens to Nintendo, has struggled to compete with TSMC in contract chip manufacturing. The recent agreement, revealed previously by Chosun Biz, validates Samsung's contract chipmaking branch, which had intended to become another pillar of the conglomerate's chip industry alongside memory.
Instead, TSMC has gradually increased its lead, winning clients like Apple Inc. and Nvidia with constant updates and dependable high-volume manufacturing. The two businesses fight to develop manufacturing capabilities at ever smaller geometries, and they are embroiled in a race to increase yields from 2-nm technology in order to improve both profitability and product quality.
A Nintendo spokeswoman stated that the firm does not divulge its suppliers and would not release manufacturing details beyond President Shuntaro Furukawa's remarks during the company's earnings presentation. The company's prediction for 15 million units factored in a tariff impact of tens of billion yen on earnings this year, but Furukawa insisted at the time that the number did not account for supply restrictions. Representatives from Samsung and Nvidia declined to comment.
Samsung has long been a major supplier to Nintendo, providing NAND flash memory and OLED panels for the Switch. According to another source, the Korean corporation has also advocated for the usage of OLED displays when Nintendo updates the Switch 2.
The processor for Nintendo's 2017 Switch was produced by TSMC using its more advanced process methods. However, the Kyoto-based business is switching to Samsung since the new device's Nvidia-based chipset was designed specifically for the Korean company's production methods, according to one of the sources.
According to the individual, this may benefit Nintendo in the long run because it will no longer have to compete with other firms for capacity at TSMC.
Nintendo has struggled to satisfy demand for what is likely to be the fastest-selling system in history. It is depending on the Switch 2 to kickstart a once-in-a-decade transition, replacing the eight-year-old original and reviving growth after years of sluggish profitability.
This year, it already apologised for being unable to accept further pre-orders for the Switch 2. The business said it received 2.2 million applications in Japan alone. Nintendo had already worked to increase Switch 2 manufacturing before accepting pre-orders, and had pushed suppliers to ramp up production to meet high demand, according to the sources.
Earlier this month, Nintendo stated that it anticipates Switch 2 shipments to total 15 million units in the fiscal year ending March 31, falling short of Bloomberg's average of 16.8 million analyst projections. Furukawa told reporters that the company's initial goal was to match the original Switch's launch in 2017, when it sold about 15 million units in its first ten months. This indicated to experts that there was opportunity for that level to rise.
