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Fight-the-Streets on 07 March 2023
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Soundwave said:

I'd also maintain I think there are factors at play beyond just "whether or not a new hardware is needed!".

If Nintendo ordered new hardware to be developed they likely did so 3-4 years ago, and if that hardware is now ready, someone has to be paid (someone being most notably Nvidia).

You can't just hire someone to paint your house and when they finish say "well it turns out I could've waited a year or two for my house to be painted, so can I pay you two years from now?". It doesn't work that way in chip design either. So I think the successor hardware chip was always going to be ready for 2023/2024.

Would you do a large job for anyone and then accept not being paid once the job is finished? Why do people expect Nvidia to behave that way? 

Nintendo can eat a bunch of losses by paying for it and not getting any revenue back I guess but I doubt they want to do that.

There's not much logic in sitting on a finished chip that you have to pay for, not making any money off of it, and then on top of that having a declining existing hardware that's bringing in lower and lower hardware sales and profit on a yearly basis to go with that. 

Right, but there must be some leeway. I mean, nowadays you can expect that a normal console lifecycle is 7 years. At what point will you order the new chips, in year 5 or 6? But what if year 5 turns out to be a stellar selling year for the current console, surely you don't want to kill it off prematurely. There must be clauses in the contract to extend the payment up to 3 years or just pay half and the rest later. In any case, even if they have to pay 100%, Nintendo can easily pay it upfront. It's no loss because once they actually release the console they have to pay nothing anymore. But such costs would easily be detectable in the Quarterly Financial Statements.