Nintendo Is Said to Hike Switch Target Again to Sate Gaming Boom

(Bloomberg) -- Nintendo Co. is raising its target for Switch production to around 25 million units this fiscal year, people familiar with the matter said, as the ongoing Covid-19 pandemic keeps lifting demand and component shortages ease.

The Kyoto-based company, which in April hiked orders to 22 million units by March next year, is asking partners to tack on another few million units, said the people, who didn't want to be identified discussing internal goals. Assembly partners plan to work at maximum capacity through December. The new production target suggests Nintendo's likely to outperform its Switch sales forecast of 19 million units for the current fiscal year, which analysts have either deemed conservative or blamed on possible Covid-19 supply shocks.

Read more: Nintendo Switch Parts Supply Limited by Lockdowns in Asia

Plans could still change by adjusting output in the January-March quarter if demand begins to taper in the coming months, but production partners expect to at least surpass the 22 million units they'd previously been instructed to assemble, the people said. A Nintendo spokesman declined to comment.

The company has been boosting Switch production since the start of this year, even before hit game Animal Crossing: New Horizons became the breakout success of the novel coronavirus era. Its assembly partners, who also serve major smartphone makers, initially prioritized requests from more lucrative handset contracts, but now find themselves with more capacity as orders level off due to the economic downturn as well as the roiling U.S.-China conflict.

The Switch remains hard to find in major markets including the U.S. and Japan, and Nintendo President Shuntaro Furukawa told shareholders in June that output should soon normalize.

Nintendo is scheduled to release its April-June results later Thursday, which analysts expect will paint a rosy picture, following strong earnings from compatriot game companies Koei Tecmo Holdings Co., Capcom Co. and Sony Corp., all indicating a strong tailwind from the global stay-at-home trend. The company could revise its sales forecast, though it typically waits until the year-end shopping season before adjusting guidance.

Animal Crossing was released on March 20 and proceeded to smash records for the company that birthed the Mario and Zelda franchises. It's estimated to have sold 10 million copies in the recently-ended quarter, data from games industry research house Famitsu suggest, taking its cumulative total to around 20 million.

Read more: Nintendo's Animal Crossing Is Spawning Real-Life Commerce

Some skepticism about Nintendo sustaining momentum into the latter half of the year has also been lifted with the Wednesday announcement of Pikmin 3 Deluxe, to be released at the end of October. That fills some of the void in an otherwise sparse lineup of big new games for the Switch until 2021.

©2020 Bloomberg L.P.