 Hey everyone, so we're gonna be talking about the Switch Pro again, I know, I know, okay? It gets a little tiring talking about it. Even for me. But the reason we're talking about it is because of a new video put up by Linus Tech Tips just yesterday. The video says I was right. And what it actually goes deep into is the semiconductor industry using sources at the very top of the companies who spoke off the record about what's happening in the semiconductor industry and why some products are rather easy to get like phones and why other products like graphics cards, video game consoles are hard to get and how it's not really due to what you might think. In fact, because of what's happening here, it actually makes it seem like there's not really anything holding back a release of a Switch Pro. Nintendo might not actually be short chips. Let's talk about that. So before we do, I want to remind you we have a giveaway going on. We are giving away $100 Nintendo Switch, PlayStation or Xbox gift card, also $220 Nintendo Switch, PlayStation or Xbox gift cards and a copy of Monster Hunter Rise. Giveaway ends at the end of this month. To enter head down to the description or the pinned comment. Four winners and I wish all you guys luck. So I've got a bunch of notes here, a couple pages of notes from his video and I really encourage you to go watch it. I will link it down in the description because he does a much better job explaining it but we're going to get to the cliff notes here. So he did speak to people high up in the company and talked about the lack of semiconductors because he, like many people out there, thought that the lack of semiconductors was basically because, hey, we hit a pandemic and they actually didn't have enough people in the factory so production went down. Which did happen for a single quarter in quarter one of 2020. Since then they've actually been making more semiconductors than ever. So what happens is these factories typically work at 80% capacity. They work at 80% capacity instead of 100 because it gives them enough profitability while enabling the actual machines to have enough downtime and maintenance to last for a long time. If you run machines nonstop 24-7, 365, they tend to break down a lot more often, not last as long. These machines are extremely expensive as we will get into a little bit later and how we're talking about how they're trying to fix the quote-unquote issue but it takes a lot of money and a lot of time to do that. So for those of you who don't know, there are two major semiconductor manufacturers and those manufacturers are hitting their targets like always. What happened is, to give you kind of the long and the short version here, is that all these companies put in orders with these chip manufacturers back at, you know, end of 2019, early 2020, you need to order your parts way in advance, usually six months to a year in advance. And when you do that, you are trying to do it based on demand or what you project demand to be. What happened is, in the beginning of 2020, everyone across the industry essentially thought demand was going to go down. Car manufacturers thought demand was going to go down for cars and they did. For a brief moment, as the pandemic rose, people decided, hey, getting on public transport like buses and trains and subways are not a good idea during a pandemic. So we need our own vehicles to get around. Yes, you could talk about how, oh, but why would that be the case? Why wouldn't you just stay home? Well, not everyone can afford the home delivery grocery services. It's cheaper to just get a car and go get it yourself. Go to all these. It's just reality. So what ended up happening is demand for cars actually went up at a time when car manufacturers thought they would go down. So the reason that assembly lines right now are shutting down on cars because they don't have enough chips isn't because the chip orders aren't fulfilled. It's because they didn't order enough of them. Same thing is actually true for Nvidia. Same thing is true for AMD. These companies did not order enough chips. They actually ordered what they thought would have been a normal demand increase, but because everyone's at home, the demand shot up 30%. 30% and they can't keep up because they didn't order enough of the parts to do so. So what reality is, is that the factories right now are actually working at 100%, which they don't like to do because the equipment doesn't last as long. It actually becomes more costly in the end. So they are trying to open up two new factories. Now, the two companies we're talking about here are Samsung Foundries and Taiwan Semiconductor Manufacturing Company that is part of TSMC. And these are the two companies that pretty much make all of the major new semiconductors that are used in the whole world. And the thing is they are building new factories. I think TSMC has a $35 billion factory being made in Arizona, whereas Samsung has just invested $17 billion to build a new factory here in the United States that won't be ready until 2023. So these factories take a long time and a lot of money to make, so they're not going to just be able to increase what they're already doing anytime soon. In fact, by the time they can, they might not even need those production levels. They'll just be able to have them if they ever need them again. Now, to break this down further, what ends up happening for something like A-Switch Pro is that whatever chips that they are getting made through Nvidia for their system would have already been ordered ahead of time. Nintendo would have already had their order in with Nvidia and Nvidia would have obviously had that order in with the semiconductors to make this happen. So whatever chips Nintendo was targeting, even if they didn't finalize the specs, because you could change clock speeds and all that, but whatever chips they needed, Nintendo would have already had ordered. And with them already ordered, Nintendo would have got exactly what they ordered. They just can't get anything more than what they ordered. Now, it's possible Samsung is actually the manufacturer on this, because after all, Nintendo did get to open a brand new manufacturing line with Samsung quite recently. So chances are Samsung is actually the people making the chips, which actually could smooth out the transition for making these things more often. It actually makes the manufacturing line opened up with Samsung a lot more obvious why they did that, to help streamline manufacturing of chips for Switch Pro. But here's the thing, with that in tow, what that means is Nintendo is going to get what they ordered. The question is, did Nintendo order enough of them? And that, we don't know. We don't know what Nintendo's order is for. When you think about how hard it is to get a PlayStation 5 and Xbox Series X, yes, part of it's because the semiconductor industry can't keep up, but it can't keep up because Sony and Microsoft didn't order enough of the chips in the first place. These companies didn't order enough, they didn't anticipate demand soon enough. So sure, factually by the end of 2021, they will be making more PlayStation 5s and more Xbox Series Xs than they were at the end of 2020. But why is that? Because the new orders have come in from those companies to get more of those parts. And what's lost here is along the chain, the semiconductors might be the beginning, but there's still, you have to build boards to put those chipsets on, you have to bend the chips and decide where the chips are going to go, who they're going to go to, what products are going to go in. You have to go through all this stuff, shipping, manufacturing, packaging, and before you know it, everyone is maxed out right now. Why do you think Nintendo opened a new assembly line in the middle of a time that it doesn't seem like they can get enough parts anyways? Because they need to be ready for the influx of parts they have coming in so they can be better prepared to handle a higher volume of Switch units. So in other words, Nintendo was preparing themselves for the demand for Switch Pro and they clearly think the demand is going to be at a level that they needed another manufacturing line. So put that in perspective, Nintendo clearly has a certain number they are targeting for the launch of Switch Pro. They think that number is what they are going to hit, if they are off by 30 or 40% in terms of demand, then yes, we are going to have an issue just like we do currently with PlayStation 5, with Nvidia and AMD GPUs and even AMD CPUs. We're going to have a shortage. We're not having a shortage with phones because demand for phones didn't increase, so fulfilling those contracts for the phones was just what the market needed for that. But we're seeing it in other devices and cars and GPUs and game consoles because all of them under projected massively what the demand was going to be for those products. Some of these contracts being done before there even was a pandemic, some of these done at the very beginning of the pandemic when people thought people would spend less money. Now you might be saying, but why are people spending more money? Well, let's look at this from another perspective and Linus Tech has actually framed this quite well. The industries that are most affected by stay-at-home orders are going to be things like food industry or general labor, so construction as an example. Those would be industries that are massively impacted because they require direct person-to-person contact, versus a lot of jobs that people are finding out could be perfectly done at home, a lot of programming jobs. Hey, turns out they can be done pretty remotely. We're still getting video games releasing because it turns out, hey, a lot of video game programming, maybe not ideally, but it can be done remotely from your home. A lot of work can be done remotely. A lot of client work can be done remotely. A lot of lawyer work can be done remotely. A lot of work that people that are interested in technology like this camera I'm using or the monitors behind me, like those of us that are interested in technology tend to be working in fields that can actually work from home. And thus our revenue isn't as negatively impacted. And with it not as negatively impacted, we now suddenly find ourselves with more free time being able to work at home and make our own schedules. And we want to buy new stuff to do at home. So demand is going up and up and up. And none of these companies projected that to happen. So they messed up. They didn't order enough. That's really the truth of it. And now orders are at maximum capacity and they can't make anymore. So is Switch Pro going to come this year? Is Switch Pro going to come next year? Really doesn't matter. Whenever Nintendo was planning to release Switch Pro, which all targets, according to Bloomberg anyways, are 2021, are very realistic because even if Switch Pro ends up short, it's because Nintendo under-projected the demand for the system, which is pretty much what would happen anytime a system would be short. So it doesn't really matter when they launch Switch Pro. Nintendo has exactly the amount of orders that they ordered in the first place. The question is, did Nintendo better project demand for Switch Pro than Sony and Microsoft did for PlayStation 5 and Xbox Series X? That is something that we're not going to know until the system comes out. So again, yeah, are scalpers a problem? Sure. But really it's just demand that's a problem. And these companies undershooting it. So long as Nintendo didn't undershoot what demand expectations are for Switch Pro, it'll be fine to launch in 2021. There really isn't a semiconductor shortage reason for it not to. It's just our companies ordering the correct amount. That being said, I am the thinner of a chance from the 10R Prime. If nothing else, it should be Nvidia GPU fans that might be a little angry at Nintendo because there are parts of the Nvidia GPU manufacturing going on right now as semiconductors that are actually dedicated to contracts with Nintendo for Switch Pro. And yes, for the Tegra X1 line, if you wonder why the Tegra X1 line is rumored to be ending this year, it's specifically to open up more semiconductor lines to make newer GPUs, which is one reason why Nintendo might be actually forced even quicker to get Switch Pro out the door because Nvidia might be more willing to fulfill Nintendo's orders for newer products so they could stop making the older products as well and focus on making more newer GPUs. So it's kind of a mess of things and everyone's negatively impacted by it and all of it's things to COVID. So if you want to know why things are messed up, blame the pandemic, but don't blame the pandemic because they're not making enough. Blame the pandemic because the companies didn't know what was going to happen. And now that we do, they have to wait for the manufacturing capabilities to increase, which are going to happen for a couple of years, and by then we might not need the increase. It's kind of a solving a problem that might not exist at the time that it's solved while we deal with it during a time that we wish we could solve it right now. It is what it is. Here's hoping that there isn't supply issues with Switch Pro and that hopefully Nintendo over-projected demand for it because if they over-projected demand, that means it should be rather easy for all of us to get one. Alright folks, I'm Nathan Robojance from the Nintendo Prime. Hopefully you understood all this. If you don't, I implore you to go watch Linus Tech Tips video that deep dives even further into this. It doesn't talk about Switch, specifically just technology on the whole, targeting a few different sectors with GPUs and all that, but it's very fascinating and you'll learn a lot. A lot of things that are presumptions, educated guesses, and whole color manufacturers are being prioritized in the line is pretty much all bullshit. No one's being manufactured or no one's being prioritized at the manufacturing line. Everyone's just getting exactly what they ordered.