The sole supplier of Nintendo Switch displays, Japan Display Inc. (JPI), is in a bit of financial trouble. According to The Wall Street Journal, JPI reported a net loss of ¥31.5 billion ($286.4 million) for the financial quarter ending in June, and things don't seem to be looking up. Today it's come to light that JPI announced that it wouldn't rule out a partnership with a Chinese or Taiwanese company to survive. This, despite JPI's goal to be the number one domestic display business in Japan.
According to the WSJ, Japan Display executives apologized today for poor management of the company, and a drastic restructuring is due to take place imminently. This initiative will result in the loss of 3,700 jobs worldwide -- that's about 30% of JPI's current total workforce. Overseas operations will understandably be slashed, but more injurious is the fact that JPI will be shutting down domestic factories as well.
“We continue to face very severe market conditions,” financial chief Takanobu Oshima said, predicting a 15% to 25% drop in revenue in the year ending March 2018 from a year earlier. Much of this loss is due to the fact that Apple, JPI's most prominent and lucrative partner, is moving away from liquid crystal displays in favor of OELD screens. Currently iPhone displays make up over 50% of JPI's revenue, and as Apple makes that shift to OLED, growth and revenue will only continue to retard for the struggling display manufacturer.
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If it turns bad, there is a slight chance we will be able to see a new Switch hardware revision. Either the displays will be made by a new manufacturer, a new type of display, or perhaps a less than normal quality display? Who knows at this point.
Apple ditching the LCD displays for OLED displays could also mark a change on the fate of the company itself. Given that Nintendo has contracted enough for up to 10 million displays, and if the company bankrupts, we could be seeing an unprecedent lack of Switch hardware sales. Why? It takes a long while to get contracts ready, and production lines working to bring the sales back up to speed. Not just that, manufacturers have to compete with the highest bidders in order to finance itself. Nintendo here is just a drop in a bucket when it comes to who has the highest bids.
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