During its Nintendo Direct presentation at the E3 conference, Nintendo announced a bunch of new games for the Switch console. Earlier this year, the rumor mill claimed that the Japanese company could launch two new Nintendo Switch models at the E3 conference, but that didn’t happen. A new report from The Wall Street Journal claims that the new Nintendo Switch models have already entered production, and would launch soon.
Two new Nintendo Switch models to launch later this year
Citing sources within Nintendo’s supply chain, the WSJ reports that Nintendo would launch a high-end model with beefed up specs. It would look similar to the existing Nintendo Switch. There will also be an affordable version of the handheld console designed for portability. It will have a new look. Nintendo is expected to keep selling the existing Switch even after launching the new models, at least for some time.
Considering the new consoles have already entered mass production in Southeast Asia, you can expect them to arrive sometime soon. The holiday shopping season is the best period for Nintendo’s console sales. The new Nintendo Switch models could arrive just in time for the holiday season. Microsoft is planning to launch the next-generation of Xbox in late 2020. Sony’s next-gen PlayStation is expected to launch around the same time.
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The WSJ’s sources didn’t reveal how many units Nintendo intends to produce this year. They said the company wants to have enough units to sell in the United States when the new consoles hit the store shelves. The US is the world’s largest market for gaming consoles.
According to the publication, the affordable version of the new Switch could be priced at around $200 compared to the current console’s $300 price tag. The lower price could help boost sales.
Nintendo isn’t making the upcoming consoles in China
Nintendo is not producing the upcoming Switch models in China. It’s also moving at least some production of the current Switch from China to Southeast Asian countries. The Japanese company said in a statement that most existing Switch production takes place in China, but it is exploring other locations as well. Nintendo and other companies are moving their production away from China to avoid the US trade tariffs.
Nintendo has razor-thin profit margins on Switch consoles. It earns most of the profits through software sales. If it makes the consoles in China, it would have to pay 25% tariff when it imports them to the United States. It could hurt the company’s US shipments as well as profits. So, Nintendo wants to avoid the increased tariffs on US imports.
The US-China trade war has already prompted dozens of companies to move their production away from China. Vietnam and Taiwan have emerged as the biggest gainers from the trade war. Recently, the US hiked tariffs on $250 billion worth of Chinese goods from 10% to 25%. The increased tariff makes the US-made products cheaper than Chinese imports, encouraging consumers to buy American goods.
President Donald Trump has threatened to hike tariffs on the remaining $300 billion worth of Chinese imports. If it happens, it would cover electronic goods such as smartphones, tablets, and gaming consoles. The US is using tariffs as a negotiation tactic to put pressure on China and strike a better trade deal. Beijing has retaliated by hiking tariffs on $110 billion worth of American imports.
Foxconn, which assembles iPhones for Apple, has also said that it has enough production capacity in Southeast Asia and India to manufacture all the US-found iPhones outside China if needed. GoPro and Google are the other major vendors that have decided to move their manufacturing away from China to avoid tariffs.