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Reports have suggested that two new Nintendo Switch models are on the way. Officially, Nintendo has not considered this possibility, although it has declared not to announce the new systems at E3. This has turned out to be true, but a new Wall Street Journal report released this week at E3 2019 reveals new details regarding these supposed new models of Switch. Specifically, the report states that Nintendo has decided to move production of the new consoles in Southeast Asia rather than in China due to concerns about potential tariffs applied by the United States on electronic products made in China.
As previously stated, President Trump's proposed 25% tax rate would affect video game consoles, as well as smartphones and computers. In theory, this could lead to price increases on game consoles – from Nintendo, as well as Microsoft and Sony – as companies pass the costs on to their consumers. (The alternative would be to absorb the cost themselves.)
Game consoles are not historically the ones where money is earned. Systems are often sold at a loss or with very small margins, with profits coming from software and services.
If the 25% rate comes into effect for Switch consoles shipped to the United States, it would affect the amount of console sales made by Nintendo and other companies. Nintendo has been the benchmark in this area, however, as the company has maintained switch sales from day one in 2017 earns money on every console sold.
If the 25% tariff comes into effect, it could reduce the switch's profit profile, which probably explains why Nintendo chose to move the console's production outside of China.
According to the WSJ report, Nintendo has already transferred the production of the existing Switch model, as well as the two new models alleged, to Southeast Asia. For new systems, one would have a form factor similar to that of the existing model, but would have better components, the other should have a different appearance and lower specifications making it less expensive. Since the systems are now in production, they could be released soon, the WSJ said.
Nintendo declined to comment on the report when WSJ approached it.
We do not know when Nintendo will announce the new Switch models, if they are really real. Having no new material to discuss at its Direct conference this week, Nintendo has made a series of software announcements, including The Witcher 3 for Nintendo Switch and a sequel to The Legend of Zelda: the breath of nature.
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