Nintendo Switch sales are doing incredibly well and having outdone Nintendo’s sales expectations, the new console now looks well on track to outsell its predecessor, the Wii U. While this is good news for the platform holder and good news for fans, it seems that one supplier involved in making the console isn’t reaping the benefits.

Japan Display Inc. is the company that provides the Nintendo Switch screens and it has now reported serious financial struggles. The company suffered from a net loss of 31.5 billion Yen, or around $283 million USD in the last quarter. As a result, Japan Display Inc. may have to merge with a Chinese or Taiwanese company in order to survive, and 3,700 employees (approximately 30% of its workforce) will also be laid off.

Many fans will be wondering how Japan Display Inc. could be in such trouble given the demand for the Nintendo Switch, but a report about the company’s financial issues explains that the Switch screens are relatively cheap. So, although it is the sole supplier of the console component, it may not make a huge amount of money from that deal. Japan Display Inc. also creates screens for Apple iPhones. However, as Apple is moving away from OLED screens for its devices in favor of liquid crystal ones, the company is feeling this change in a big way.

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The other big question on everybody’s lips is what this might mean for the Nintendo Switch moving forward. Nintendo has increased console production for the Switch in order to keep up with demand, but the company will be unable to keep up this pace if its screen supplier goes under.

The busy holiday shopping season is almost here, and thanks to games like Super Mario Odyssey, the Nintendo Switch is expected to be a seriously hot property. It would be nothing short of a disaster if Switch production is to come to a halt because of Japan Display Inc.’s troubles. The console is already out of stock in many places before the holiday rush has even started, and would-be buyers would be devastated by any further stock shortages.

Nintendo is likely watching the situation closely, but it’s unclear if the company is gearing up to make a decision. As a safe option, the company may well begin exploring working with other suppliers, hopefully choosing one that won’t lead to battles with Apple.

The Nintendo Switch is available now.

Source: The Wall Street Journal

tags: Nintendo, Switch