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Soundwave on 03 May 2017
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NintendoPie said:
Soundwave said:

My guess is Nintendo has some kind of contractual obligation to sell 10 million Switch systems to Nvidia/TSMC (the manufacturer).

They got a cheap price on those Tegra X1s on the basis that they would minimum order 10 million of the 20nm Tegra X1. That price is fixed. Once they get past that, I think other options will open up for them.

Would make a lot of sense. Nvidia had a chip that they couldn't find vendors for on the 20nm node no one else is really using, so they gave Nintendo the chip for cheap on the condition that they have to minimum order a certain amount. 10-12 million sounds about right as that would be a minimal risk for Nintendo. 

In the time after fiscal year 2017 is over (ending March 2018) I think you will see a new Switch model(s) using the 16nm Tegra X2. 

Nintendo didn't project 10 million at first though, one would think they would project that amount of sales if they are contractually obligated to order that many units.

However, I guess you could still be right. Especially considering the mentioning of production budgets dropping after 10 million consoles is reached. Could be hinting at a new partnership for parts, as you say.

I think 10-12 million could was the contractual obligaion not just for one year, but for the lifespan or maybe like 3-4 years. It's minimal risk to Nintendo but still some risk since it could have sold like Wii U (no one can be 100% sure beforehand). 

But if Nintendo can clear that entire inventory in just 1 fiscal year, I imagine they could be happy, and they could be free to dump the older Tegra X1 at 20nm (which is a really weird production node) for a newer, more power efficient chip (hello 6 hour battery life).  

Just a guess though. My guess is Nvidia gave Nintendo a nice price on the Tegra X1 but insisted on a fixed order amount that was gaurunteed. They probably had bigger plans for the Tegra X1 and couldn't find vendors for it, maybe they made a deal with TSMC on the 20nm production node and TSMC is saying "dude, what the fuck we built this factory line to make your 20nm Tegra chips, and you're not bringing us any vendors to make chips for". Enter Nintendo.