Japanese teardown company Fomalhaut Techno Solutions took apart the Nintendo Switch and Joy-Con controllers to estimate their production cost. According to them, manufacturing a complete Switch costs about $257. Taking into account the retail price of $300, it seems that Nintendo’s profit margin here is fairly low.
According to a report by Fomalhaut Techno Solutions (via Polygon), making a Nintendo Switch costs $275. The teardown company took apart a Switch and Joy-Con controller, took a peek at what’s inside, and estimated how much each component might cost to produce.
Unsurprisingly, the tablet part of the Switch costs the most to manufacture. Fomalhaut estimates that it costs about $167; touchscreen, processor and dock. Out of the whole thing, the USB-C power supply and Nvidia processor (custom-made for the Switch) are the most expensive components.
With the Joy-Con, on the other hand, it’s a little more difficult. The HD rumble modules don’t appear to have any ID marks, so that made the pricing process more complicated. Eventually, Fomalhaut ended up estimating the cost of producing a Joy-Con at $45. The retail price for one Joy-Con is $50. The estimate doesn’t include the Joy-Con grip, but I doubt it adds much to the cost.
So, what does this tell us? Well, for one thing, you can probably forget about any discounts for the foreseeable future. Secondly, Nintendo will probably get far more revenue from selling exclusive games. Considering how devout the Nintendo fanbase is, this is a pretty safe route to take. Thirdly, before the Switch launched, Nintendo repeatedly promised that they’ll keep the price of the Switch as low as they can. They did deliver, but it seems that they cut a few corners where they could. Not going into the 32 GB of internal memory, there’s also a problem that’s been popping up recently. Players have been reporting the Switch actually losing its shape when docked for a long time. To be fair, that might just be a faulty line.
Either way you look at it, the Nintendo Switch is selling like hot cakes. Nintendo reported that they’re not operating with any losses. Whatever they’re doing, they seem to be doing it right.