In the 2021/22 financial year, Nintendo spent more than double its previous highest Switch-era annual expenditure on raw materials and supplies, according to figures from shareholder disclosure documents.
While the company hosted its 82nd AGM of shareholders on 29th June (and will soon publish translated notes on the accompanying Q&A session), this information was included in a disclosure published on 3rd June and has been highlighted recently by fwd-bwd on Famiboards (and again on Resetera — thanks, Neoxon).
The vast increase is related to the company's non-consolidated inventories and expenditure. Firstly, here are the figures from the financial year that ended on 31st March 2022:
As you can see, Nintendo spent a whopping 66,517 million yen on supplies and raw materials from 1st April 2021 to 31st March 2022.
Compare this to the same figures from the previous year's shareholder disclosure document:
As you can see, in the preceding financial year the company spent only (ha, 'only') 9,533 million yen on materials.
The documents for previous years are freely available on Nintendo's investor website, and fwd-bwd has handily compiled the figures into a single table:
As you can see, the 2019 and 2022 financial years saw large spikes in spending on raw manufacturing materials, although the figure in latest report is more than double that previous high.
This means that as of March this year Nintendo was presumably sitting on vast amounts of materials and supplies but hadn't yet begun to manufacture whatever they are destined for. As has been noted, 2019 saw the release of both the Switch Lite and the internally-revised standard Switch (the one with the better battery life running on the 'Mariko' chip), which would account for the previous spike in that financial year. The elevated 'Work in progress' figures from FY 2021 are likely related to high production to meet demand following the complications brought on by COVID. 2022's 'Finished goods' figures don't show much of a spike after the previous years' struggles, and 'Work in progress' expenditure is significantly lower in FY 2022, despite the huge increase in supplies spending.
Which means what exactly? Well, before we start speculating about shiny new SKUs and Switch 2s, it's worth noting that inflation, rising costs, and supply issues have been major constraints over the past couple of years, so Nintendo's expenditure in this area is bound to increase.
Still, those factors alone are unlikely to result in such a massive spike in spending. It's entirely possible Nintendo is simply stockpiling standard Switch components while it's able to, anticipating further rises in costs in the short-term and acquiring as much inventory as possible with its substantial cash reserves.
Alternatively, Nintendo could be acquiring materials for new hardware — another revision, the fabled 'Switch Pro', or a totally new thing. As we say, pinches of salt are required (as always), but the fact remains that in March 2022 Nintendo had bought up a big ol' pile of materials to build something that it will want you to spend a chunk of your hard-earned cash on.
Nintendo President Shuntaro Furukawa has addressed this increased expenditure (and the effect of inflation on the company's financials) in the recent shareholder meeting Q&A following a question on the topic. We are awaiting an official translation of the document, but Google Translate offers the following:
It is necessary to prepare for production by securing the inventory of raw materials and parts as soon as possible...
The first reason is that we keep more raw material inventories than before.
The second reason is the change in accounting due to the application of the new revenue recognition standard, and its impact.
No mention of new hardware (obviously), but no flat denial either. Again, the official translation of these notes will likely shed a little more light on the subject. We'll update this post with more information as we get it.
[source nintendo.co.jp, via famiboards.com, resetera.com]
Comments 65
Switch 3 confirmed.
I'm sure new hardware has something to do with it. Still, this doesn't tell us that they'll actually be releasing a new platform any time soon.
Switch sucessor coming next year?
@Silly_G
Wait, so Switch OLED was Switch 2 ?
@Anti-Matter : Switch 1.0 (Launch Model)
Switch 2.0 (Improved Battery Model)
Switch 3.0 (OLED)
Switch 4.0 (???)
So... it seems I was mistaken. The Switch 4 is, in fact, confirmed.
As insignificant as this may seem. It's actually more proof that Nintendo might be preparing for the imminent Switch 2 than some garbage fake "insider" claiming that they heard it's being developed and has nothing to back it.
I mean it might be a new model. It might just be a response to ballooning costs of everything across the world. Stockpiling supplies to meet demand for a bit and avoid price rises in the next few months.
Can't wait for those "insiders" to start claiming "This is in line what I've heard, Nintendo will announce a Switch Pro soon"
If they are like every other company in the world over the last two years they are bunkering/storing critical components. Unfortunately this has exacerbated the supply problems the world currently faces in certain commodities.
Every company worth their salt has been increasing stock levels and implementing whatever deal they can to mitigate the risk of a critical shortage. I very much doubt this is Switch 2.0, or whatever.
Switch Lite OLED.
I wonder if they will retire the LCD models soon?
Is stockpiling early during a semi conductor shortage really that outlandish to people?
Nintendo Switchxty Four confirmed
Doubt it's a new model - Nintendo may have production difficulties due to some components not being as available as others so may have a backlog of planned production units it hasn't been able to complete.
Isn't the chip shortage expected to stretch into 2023 now? I'd assume this is just them not wanting to make Sony's mistake of getting chopped at the knees in producing more units. I'm convinced that PS5 production up to this point has been solely dependent upon a single chimpanzee putting them together somewhere in Taiwan.
@SwitchVogel it seems they figured out to sell direct to actual PlayStation customers. I haven’t been able to get one, but they have had refreshes every week for three -four weeks…
What the report doesn’t point out is that all the raw materials are cardboard.
@mariomaster96 the same ones that have been claiming it for a few years too because they have that first hand knowledge that they will continue to repeat until they are right.
As an exclusive insider I can tell you these components are going to go inside of the device.
@LittleGhost My mind is blown!
Switch was released in 2017…. What did the numbers say the years leading up to the initial switch release? Maybe the switch only has 2-4 more years and it takes Nintendo that long to stockpile units for release date. 🤷🏻♂️
@Silly_G why would Nintendo release a new switch if the current one is selling? It is the same of releasing Mario Kart 9.
Those raw materials are just to keep the company safe in event of global shortages.
Let’s not forget inflation! Raw materials have increased in price like most everything else lately. Even so, given their relative quiet on 1st party stuff lately, maybe Nintendo really is prepping for a Super Switch announcement next year?
It just better be backwards compatible, given what I’m spending on Switch games this year!
Everyone else is hoping this is about the Switch Pro. Meanwhile, I'm like "Aww yeah, maybe Nintendo is gonna manufacture extra amiibo and N64 controllers!"
@Silly_G
You forgot the Switch Lite.
So Switch 5.0 confirmed 😜
If you've got cash in the bank, it makes more sense to buy raw materials that may see a massive price increase or may become unavailable. No ingredients, no cake. Or in Sony's case- microchips, no PS5.
I think this is just every day business and not a big new project.
They’ll release a switch model which will be 6 times as big, hence the raw materials needed will be 6 times as much.
Nintendo Switch Plus
Wait...for...it. Wait...for....it.
Here comes the OLED Lite!
I’m expecting them to announce a further Switch model soon. Specifically a redesign of the Lite line.
I am firmly in the camp Nintendo is building the Switch 2. I don't think the pro make any sense from a business standpoint.
What makes allot of sense is a new dock that upscales the image to 1440p and without adjustments by developers could lower the resolution of games for better frame rates and then upscale back to 1080p.
I don’t know how anyone could look at the PS5 situation and think “better release some new hardware!” I highly doubt this is indicative of anything other than a famously risk averse company continuing to minimize their risks in light of supply chain disruption.
@Magician I think they may go beyond just a screen upgrade with the Lite line. They could make something very appealing in terms of portability and dockability for the final Switch model update. They’ve got everything they need now to make the Switch lite the best of both worlds minus the larger display option.
If you think about how much literally everything in the world has gone up in price then the increase has probably more to do with trying to buy more before the price goes up again.
@abdias : ............................
'Twas a joke.
@harouhiko : The Switch Lite is the Switch 0.5. Literally everyone knows that!!!
Unless...
...the launch Switch was actually the Switch 2.0 all along and the rumour baiters have been taking us for a ride!
mind literally blown
autopsy pending
Sounds like price increases and stockpiling is the most likely reason.
This could be a whole other model, this could be just one of those revisions that improve battery life, or this could just be entirely for something else.
With inflation being as ridiculous as it has been, it's hard to speculate on exactly what this means. Which is more or less the point of this article.
@MarioBrickLayer I'd say you are on the money. It's screens.
@Silly_G I call it an upgraded Switch, similar to what Apple does with the iPad.
Hmm. Probably why we just saw the OLED and minor internal changes within that model and nothing else. They want to be ahead of the scalpers.
@Silly_G So was Switch Lite Switch -1.0?
@uptownsoul I’m just going by how long they think it’s gping to last
As you can see, Nintendo is doing something to secure a successful future.
As you can see, exiting time are coming.
As you can see, From the article.
😎
Getting ready for WW3…
Well we know something is being prepared due to the Nvidia leaks and it certainly will not be a “switch pro” the chip that Nintendo will be using will be too much an upgrade for a pro model. It’s going to be extremely good for a handheld. My guess is, Nintendo are stockpiling chips and materials ready for the next switch, they obviously don’t want a Sony situation. I’m certain it will be ready for spring 2023 ready for BoTW 2 and the next 3D Mario
Switch 2 (oled) with early 2023 release let's go 😃
Stockpiling parts and raw material could mean anything, it could be very well the Nvidia chips the guys from Nvidia said the were going to stop manufacturing, so they ask their costumers for final orders and Nintendo bought the ones they need to end switch life cycle
i firmly believe the reason the breath of the wild sequel was delayed so that it will come out when a new switch is available..
No doubt about it that it's a more powerful Switch that launches alongside BotW 2. The gap between BotW and BotW 2 is 6 years so the next Zelda game after BotW 2 will launch in 2029 which is too late for the next hardware.
Here is Nintendo's full response to questions about their increased stockpiling of materials from their recent shareholder meeting (translated via DeepL):
So the semiconductor shortage and a significant change in their accounting system is the reason why the raw materials inventory is so high, not because a new Switch revision or successor is imminent.
I don't know if Japan is seeing inflation like other parts of the world, but they could be buying stuff now before inflation makes it much more expensive. Whether it's for a Switch 2 or making more of the current models, they'll want to ensure they don't have to pass a price increase on to consumers.
Switch HD 3D XL
PS5 production up to this point has been solely dependent upon a single chimpanzee putting them together somewhere in Taiwan
@SwitchVogel Sounds like the story/premise for a classic single-screen '80s arcade game.
Shall I arrange the Kickstarter, or will you?
Switch Lite + ? (No OLED, 64GB)
Don't worry guys we've only been told no less than 4 times we're not getting a Switch Pro, but this confirms that it's happening and that we sholud all continue to be extremely dissapointed if it doesn't.
Have y’all seen the shortages and supply issues? Everyone is stocking up if they can. Otherwise they risk no product on shelves.
Switch pro? I would buy something like that rn
New Super Switch Pro Max XL SP OLED model confirmed
66,517 million yen on supplies and raw materials
Means something is coming and they need a good production run. aka Switch 2/Pro/Super model is coming. Why else would someone stock on production inventory. Don't think that spending is just inflations related.
Of course this had to come out the literal week I was planning to order an OLED switch :' )
I hope the next hardware iteration is something akin to the Game Boy Advance or 3DS, where it still supports the previous generation, but is a big enough leap that new games are incompatible with the original Switch.
A new console is inevitable and seeing PlayStation still not meeting demand, this could just be a prudent move for when it does come out. But that release could still be 2-3 years away, and they're not taking chances.
It's clearly for Nintendo LabOLED.
The next Switch is going to be backward compatible with tweaks for higher GPU games. They aren't stupid enough to forget their base game install. We just seem to have NintenDoomed fandom acting as Nintendo gamer here-that can't let go that Switch success and didn't die 1 year when released. And people like it regardless of the graphics that wasn't it's selling or driving points.
@Slowdive Drake?
@Rika_Yoshitake What part of the story was forgotten about. Early this year Nintendo revised down the number of Switch units it would sell due to supply issues. This is clearly Nintendo dealing with supply issues for the current Switch. This is NOT a new system.
Tap here to load 65 comments
Leave A Comment
Hold on there, you need to login to post a comment...