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Report: Sony, Microsoft, and Nintendo consider moving manufacturing out of China

Report: Sony, Microsoft, and Nintendo consider moving manufacturing out of China

July 8, 2019 | By Alissa McAloon

July 8, 2019 | By Alissa McAloon
More: Console/PC

Console makers are weighing their options following a period of economic unease between China and the US and, according to sources speaking to Nikkei Asian Review, are considering moving some game console manufacturing out of China as a result.

As the three companies warned in an earlier letter to the Trump administration, a significant shift in production like that would cause a significant supply chain disruption and raise console costs in the process. Rumors of the shift also come as both Sony and Microsoft are building toward the release of their next-generation consoles, while Nintendo reportedly has an unannounced new Switch model or two in the works as well.

The United States and China reached a truce and agreed to hold off of imposing new tariffs at the G20 summit in Japan last week, but the publication’s sources say that Sony, Microsoft, Nintendo, and other tech companies are still considering a manufacturing shift both due to that uncertain situation and rising costs in China. 

In the case of Nintendo, earlier rumors seem to indicate that it may have already moved some production out of China to preempt the tariffs. Now the other two console makers and PC companies like HP, Dell, Lenovo, and Acer are reportedly considering the same.

Ahead of the G20 summit, Nintendo, Sony, and Microsoft penned a letter to the Trump administration to caution against imposing tariffs on video game hardware and illustrate the impact that action would have on both the game industry and economy as a whole.

“It would cause significant supply chain disruption to shift sourcing entirely to the United States or a third country, and it would increase costs—even beyond the cost of the proposed tariffs—on products that are already manufactured under tight margin conditions,” reads the letter released online last month. “Tariffs would significantly disrupt our companies’ businesses and add significant costs that would depress sales of video game consoles and the games and services that drive the profitability of this market segment.”

Update: Microsoft has issued a statement to CNET rebuking Nikkei's report, saying that the report "was inaccurate and does not reflect Microsoft's manufacturing plans in China in any way." Nintendo, meanwhile, has confirmed that it has moved some Switch production from China to Vietnam, a decision it says was made to "diversify risks."

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