Nintendo is preparing for the launch of its much-anticipated console, the Switch 2, scheduled to hit the market on June 5. As the company gears up for this release, it finds itself navigating a complex landscape of tariffs and production challenges. The administration’s recent efforts to increase U.S. manufacturing could pose new accusations and hurdles for Nintendo. Experts have told us that moving more production onshore could take years to accomplish.
Over the past few months, Nintendo has been quite aggressive in shifting more shipments of the Switch 2 to the United States. This strategy aims to address the impact of existing and future tariffs directly. These tariffs have begun to have an effect on pricing. The company has significantly increased production from its Vietnamese manufacturer, Hosiden Corp., with shipments to the U.S. nearly doubling in August compared to last year. In fact, according to customs data provided by Bloomberg, “Hosiden Corp., one of three main Switch 2 assemblers, shipped more devices in February to the US from Vietnam than in the previous six months combined.”
With those actions, Nintendo has secured itself an advantageous launch in front of its competitors. It has met an intimidating obstacle head on—tariffs. Until earlier this week, Vietnam was subject to an extremely high 46 percent tariff on their exports to the U.S. President Trump rode to rescue just in time, reversing course as the equity and bond markets crumbled. This would be short-term relief for Nintendo, but future tariff policies remain uncertain.
On the broader scope of Nintendo’s production strategy, we’ve witnessed a pretty big pivot. Switch 2 production moved significantly this year. It rose from 11 percent at Hosiden to above 60 percent at its U.S. operations. Even with this massive investment, experts are still doubtful that Nintendo could realistically produce the Switch 2 in the U.S. in the near future. They point out that establishing a new final assembly factory requires significant lead time and capital. This process will almost certainly delay possible domestic production by many years.
Though there are a lot of obstacles in the way, Nintendo is clearly preparing for an epic launch. The firm needs to reposition its price structure soon. Absent that, it might be compelled to offer the Switch 2 at a financial loss due to the ongoing 10-percent import tariff imposed on consoles. As industry analyst Hideki Yasuda flagged, the bill of materials for the Switch 2 is about $400. He thinks this implies that Nintendo would continue to sell consoles at a loss in the US because of the 10% tariff, but that Nintendo is able to absorb that loss.
The overall gaming industry landscape makes Nintendo’s predicament that much more difficult. Competitors including Sony, which is more dependent on Chinese manufacturers for the PlayStation 5, are feeling the pinch. By comparison, the challenges that Nintendo faces are entirely opposite. As publishers identify their strategies for navigating these murky tariff waters, their decisions will undoubtedly affect the market’s landscape heading into this console generation.
With launch day approaching, Nintendo has already moved full steam ahead for a massive launch. They sure look prepared to have millions of consoles coming from Vietnam by June. The current tariff landscape is extremely chaotic, adding extra obstacles to domestic production. Unfortunately, it’s currently on pace to look like one of the most chaotic console launches in U.S. history.