Nintendo Co. has turned to Samsung Electronics Co. to help make the main chips for the Switch 2, a move that may help the Japanese company ramp up production of the gaming console enough to sell a higher-than-projected 20 million units by March 2026.
The decision marks a key win for Samsung, which is trying to compete with Taiwan Semiconductor Manufacturing Co. (TSMC) in making chips for the world’s electronics, people familiar with the matter said. Securing a contract for one of the summer’s hottest new gadgets will likely help lift utilisation or boost business for the Korean conglomerate’s chip foundries.
The Korean company is now working on a customised chip or processor designed by Nvidia for the Switch 2 using its 8-nanometer node, the people said, asking for anonymity as the matter is private. The production pace should be fast enough for Nintendo to ship more than 20 million units of the console by March next year, the people said. Samsung can ramp up further if needed, though much would depend on capacity at hardware assemblers including Foxconn Technology Group.
Samsung, which already supplies memory chips and displays to Nintendo, has struggled to compete with TSMC in contract chipmaking. The latest deal, reported earlier by Chosun Biz, is a validation for Samsung’s contract chipmaking division, which once hoped to grow into another pillar of the conglomerate’s chip business alongside memory.
Instead, TSMC has steadily widened its lead, attracting customers such as Apple Inc. and Nvidia through consistent upgrades and reliable high-volume manufacturing. The two companies compete to improve production capabilities at increasingly smaller geometries, and are locked in a race to boost yields from 2-nm technology to raise both profitability and product quality.
A Nintendo spokesperson said the company doesn’t disclose its suppliers and won’t provide production information beyond President Shuntaro Furukawa’s comments during the company’s results announcement. The company’s projection for sales of 15 million units factored in a tariff impact of tens of billion yen on profit this year, but Furukawa stressed at the time that the figure didn’t reflect supply constraints. Representatives for Samsung and Nvidia declined to comment.
Samsung has long been a prime supplier to Nintendo, providing NAND flash memory and OLED screens to the Switch. The Korean company has also pushed for OLED panels to be used when Nintendo refreshes the Switch 2 in future, another person said.
The chipset for Nintendo’s 2017 Switch was manufactured at TSMC using its more mature process technologies. But the Kyoto-based company is pivoting to Samsung because the Nvidia-based chipset that the new device employs was optimised for the Korean company’s manufacturing systems, one of the people said.
That may in retrospect prove beneficial to Nintendo, since it won’t have to compete with other companies to secure capacity at TSMC, the person said.
For Nintendo, it’s been a challenge making sure it can produce enough units to meet demand for what’s expected to become the fastest-selling console in history. It’s counting on the Switch 2 to galvanise a once-in-a-decade handover, moving on from the eight-year-old original and rekindling growth following years of tepid earnings.
This year, it’s already apologised that it couldn’t take more pre-orders for the Switch 2. The company said it got 2.2 million applications in Japan alone. Nintendo had worked to boost Switch 2 production even before it began taking pre-orders, and has asked suppliers to step things up to sate strong demand, the people said.
Earlier this month, Nintendo said it expects shipments of the Switch 2 to reach 15 million units in the year to March, shy of the 16.8 million average of analyst estimates compiled by Bloomberg. The company’s first objective was to match the original Switch’s debut back in 2017, when it sold around 15 million units in its first 10 months, Furukawa told reporters. That suggested to analysts that there was room for that level to rise.
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