Nintendo will move production of some components for popular handheld gaming device Switch from China to Vietnam in the coming months.
While some have speculated that the decision is an attempt to avoid tariffs resulting from the escalating US-China trade war, a Nintendo representative explained to Reuters that it is merely an attempt to diversify the risks associated with manufacturing a device in a single country. Currently, nearly all Switch devices are contract-produced in Chinese factories, 40% of which are sold in America and 20% in Japan.
Over 95% of all major video game consoles sold in 2018 were produced in China. If US President Donald Trump's threatened tariffs went into effect, Nintendo and other video game makers would see their tariffs rise from 10% to 25%. The scenario caused Nintendo to team up with rivals Sony and Microsoft to write a joint letter on June 17 addressed to the Office of the United States Trade Representative asking that video game consoles be exempted from the tariffs because of the "disproportionate harm caused by these tariffs to US consumers and businesses."
The letter explained that their slim profit margins would result in the extra costs being passed directly to consumers. Moreover, they explained how any negative effect on the gaming industry could ultimately harm American innovation, as the companies consider themselves drivers of hardware and software improvements that impact far-reaching fields. Finally, they said the tariffs' stated goal of cracking down on intellectual property rights doesn't apply to them because China has not yet found a way to copy their designs.
While neither Microsoft or Sony have announced plans to move production out of China, other companies are doing so, with Vietnam serving as an attractive alternative. Japan-based Sharp recently moved south of the Chinese border into Vietnam, and Apple is considering doing the same.
[Original photo via Flickr user Alex Holyoake]
