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Wii U Production in trouble

Demon_Skeith

Demon_Skeith

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There may be more trouble on the horizon for the already slow-selling Wii U. On Friday the prominent semiconductor manufacturer Renesas Electronics posted its quarterly financial report, together with notice of extraordinary loss and a press release about an impending restructuring of the company.

As part of that restructuring Renesas, that merged with NEC Electronics in 2012, announced that it decided to close four semiconductor plants in Japan within 2-3 years, including the state-of-the-art factory based in Tsuruoka, Yamagata Prefecture  (as reported by the Wall Street Journal), and this may spell trouble for Nintendo and the Wii U.

The reason is quite simple. The closing factory was responsible for manufacturing the console’s Embedded DRAM, that is quite properly defined the “life stone” of the console.

The production of the 1 cm-wide semiconductor for Nintendo was responsible for more than half of the load of the factory at peak times, but the slow sales of the console determined a reduction in demand and a gap in the usage of the machinery and personnel, forcing the plant to run at a loss.
Nintendo told the Japanese Magazine Weekly Diamond that “the closure of the plant won’t have immediate effects on the production of the Wii U”, but the outlook of things isn’t too positive for the future.

Nintendo could try to contract another company to produce the component, but there are circumstances that make it difficult. According to a Renesas executive the production of that semiconductor was the result of the “secret sauce” and state-of-the-art know-how part of the NEC heritage of the Tsuruoka plant, making production elsewhere difficult. In order to restart mass production in a different factory redesigning the component may be necessary.

In light of the situation an increase in the production costs of the console seems very likely on the medium and long term due to the shift of production to a different location and to the possibility of a redesign of the hardware. One thing is for sure: the Wii U really can’t can’t get a break as of late…
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very troubling news, I hope Nintendo can quickly work something out.
 
If this doesn't end well, Nintendo might be forced to remake their 8th gen console using newer and more expensive ram. (Which could drive prices up... and give them even more problems when it comes to competing with PS4 and Xbox one. Plus it'd likely be fairly costly for them to redesign the system at this point while still ensuring that it works exactly as intended... so that games developed for the new version will still work identically for the older version.)
 
VirusZero said:
If this doesn't end well, Nintendo might be forced to remake their 8th gen console using newer and more expensive ram. (Which could drive prices up... and give them even more problems when it comes to competing with PS4 and Xbox one. Plus it'd likely be fairly costly for them to redesign the system at this point while still ensuring that it works exactly as intended... so that games developed for the new version will still work identically for the older version.)
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If I was in Nintendo's position I would give up on the 8th generation and focus on the next one.
 
The Wii U sales are low now, but Wii U still sold 3.61 million units world wide As of 30 June 2013 according to Nintendo, so there are still over 3 million gamers who can buy games, DLC, apps, and accessories for the Wii U from Nintendo.

Not very good news for Nintendo, and game consoles in general, but I think this situation can happen to any console maker since I read that AMD CPU (used in the PS4 and Xbox One, and the Wii U's video chip) in the past were struggling, and was losing money according to AMD losing money like its going out of fashion

Another quarter and AMD loses another chunk of change - $600 million to be exact.

This latest $600 million loss (amounting to $1.09 a share) comes after two previous quarters of loss - $574 million during Q4 2006 and $611 million for Q1 2007.
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Plus, with mobile computing being so popular, more casual and regular computer users may switch to Tablets which use Mobile based CPUs and video chips made by Nvidia, Samsung and Intel, so AMD may lose more cash, and make less money, and need to cut back on making chips for consoles like Renesas Electronics which is cutting back on Wii U memory chips because the Wii U is not selling as well as it likes, and it is not making enough money to maintain the Wii U memory chip factory.
 
Demon_Skeith said:
 
If I was in Nintendo's position I would give up on the 8th generation and focus on the next one.
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They would lose even more money at that point. -__- Just make good games.
 
While making this post, I kept having the urge to leak confidential game industry stuff.

Ain't happening. Sorry.

I'm sure that Renesas is very low on customers and will just take some money from Nintendo to maybe sell the plant to Nintendo or another company.

At the very least, Renesas will license all Wii U technology to Nintendo, perhaps with the sale of manufacturing equipment etc.

Nintendo surely has trouble with Renesas, but I'm sure they've got a continuity plan for the Wii U, no matter what the cost, because they'll be hurt pretty badly if they only have the 3DS.

(This is opinion with no factual basis from Nintendo or Renesas sources.)
 
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