Yeah that increasing HW production news is very interesting indeed. Makes me think Nintendo is gonna really try to get aggressive on selling the Switch (which they haven't even started trying to do yet 6 years in lol).
This news COULD mean a few things:
1. They might be trying to hold off on a successor for a good long while, perhaps until Holiday 2025 even. While keeping Switch HW sales fairly healthy and printing money with massive game sales.
2. And so it could mean they've got numerous big games coming after Zelda, obviously 2D Mario, Prime remake, and Prime 4 are kinda the main obvious ones, though there are plenty more possibilities to add to that list before the Switch is done like DK, Star Fox, Kid Icarus, another Mario Party, another Ring Fit, Zelda:WW/TP HD, maybe a Prime 2/3 HD pack, with how often Pokemon games come out maybe we'll get another Legends game or some other side adventure in 2024, hell maybe they are working on a remastered Super Mario Galaxy 2 Deluxe with new content and that's why they bizzarely left it out of 3D All-Stars.
3. Possibility of software price cuts on older games to prime that well over 100m install base to pick up games they missed out on before. Bring back Nintendo Selects for $30 for a bunch of first party games whose sales are slow now. This would in general increase excitement for new people to get the system if they can get a bunch of AAA first party games for half price.
4. HW price cuts. If chip shortages aren't a problem anymore that probably means cost of production will go back down some. Before the shortages problems Nintendo was probably making an absolutely killing on every system sold. Now with the system in its later years, if profits on every system sold is rising again they could easily drop prices to something like $170/$250/$300 to spur new sales. This news - planning to actually increase Switch production - suggests they may be planning on getting aggressive on pricing to push Switch sales to the limit rather than letting them gradually trail off at their initial prices leading into the nex-gen.
5. New model?? I think the only new model that makes sense right now would be a Switch Home, since they already have a handheld-only, the hybrid, and an upgrade hybrid. Home, as in a console/TV-only model, is the last obvious type of model missing. They could probably easily sell it at $200 with a Pro Controller and a bunch of disk space while making a nice profit. Perhaps part of the increase in Switch production is because they want to sell a few million of a brand new model this year.
Or of course they could just be being irrationally positive and aren't planning to do any of this and will end up having to rachet production down again once they increase it and see there was no need to do that. But if they plan to get aggressive in Switch's late years with SW and HW price cuts, perhaps a new model, and a bunch more big games, I could see this move making sense and them trying to push out the next-gen until 2025 - they could have a huge launch of Switch 2 in holiday 2025 with 3D Mario, MK9, and also the next mainline Pokemon as a cross-gen game.