Analysts highlight that while shifting Nintendo Switch 2 production to the US may avoid tariff impacts, it would require billions in investment and years of setup. This would lead to much higher prices due to increased labor costs compared to overseas production. Despite these uncertainties, expectations for initial sales remain high, although estimates have been adjusted downwards due to potential price hikes. The success in the long term depends on market conditions after the first year, where wider access will be crucial to determine sustained sales.
While Nintendo could theoretically avoid tariff impacts by moving Switch 2 production into the US, the process would cost 'tens of billions of dollars' and take 'four to five years' to establish the necessary factory.
Nintendo would also need to find, train, and pay employees to operate [a potential US] factory, resulting in significantly higher production costs compared to Vietnam.
Overall, analysts still expect the Switch 2 to sell well early on despite economic and pricing uncertainty, but DFC has lowered its first-year worldwide sales estimates.
The true test will come in year two, as supply is likely to become more readily available, and the addressable market will be forced to widen.
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