The Company That Builds the Switch 2 Is Now 78% Nintendo. Its Revenue Grew 81% and Its Margin Fell.

The number

Hosiden Corporation is a Japanese component maker listed on the Tokyo Stock Exchange under code 6804. Bloomberg reported in 2025 that "Japan-listed Hosiden Corp. makes Switch and Switch 2 for Nintendo"; this desk's own reading of United States bill-of-lading records found "Hosiden Vietnam Bac Giang" shipping Nintendo hardware into American ports.

Its annual securities report for the year ended 31 March 2026 — filed with the Japanese regulator EDINET in June, and still sitting on the company's investor page — contains one table that almost nobody in the games press has reason to open. It is the disclosure of 主要な顧客ごとの情報: every customer that accounts for more than 10 per cent of net sales, named.

Nintendo's business with Hosiden rose 145.8 per cent in one year, from ¥142.2bn to ¥349.6bn. The other major customer that used to appear in that table — Samsung Electronics Vietnam Thai Nguyen, at 12.2 per cent of sales in the year to March 2024 — has fallen below the 10 per cent disclosure threshold and is now omitted.

The risk section of the same filing states it plainly in Japanese: 「当社グループの売上高の78.0％は、任天堂株式会社に対するものであり、同社からの受注動向や、アミューズメント(ゲーム)機器の需要動向が当社グループの業績に影響を与える可能性があります」 — 78.0 per cent of the group's net sales are to Nintendo Co., Ltd., and the trend of orders from that company and of demand for amusement (game) equipment may affect the group's results.

That sentence is the whole story in the company's own words. What follows is what the rest of the filing adds to it.

What "78 per cent" leaves out

The concentration is not the only thing that changed. It is the only thing that grew.

Hosiden reports three segments. Nintendo's purchases are booked inside "electro-mechanical components", the segment the filing's related-party note labels 機構部品. Stripping Nintendo out of that segment using the same two tables:

So the 81.1 per cent increase in group sales is not a rising tide. It is one customer, and every other customer the company has, added together, bought 6.3 per cent less than they did the year before.

That is the arithmetic of a company becoming a department. Hosiden's net assets at 30 September 2026 were ¥157.7bn; its billing to Nintendo in a single year was ¥349.6bn.

The margin went the other way

The second thing the filing shows is what a launch does to the company holding the screwdriver.

Group net sales rose 81.1 per cent in the year to March 2026. Operating profit rose 41.7 per cent, to ¥19,236m. The operating margin fell from 5.48 per cent to 4.29 per cent — a fifth of the margin gone in the best revenue year the company has ever had. Across the Switch 2's ramp the direction of travel is down: more revenue, less profit per yen of it.

That is consistent with the shape of an assembly contract, where the assembler is paid a fee on a bill of materials it does not control and does not price. It is also consistent with a year of new-plant ramp costs; the filing records ¥7,866m of capital expenditure, directed at production equipment in Vietnam for the amusement and mobile-communications businesses. The filing does not decompose which, and this article does not either.

The compression is not a mix effect from the weaker acoustic business. Inside the segment that carries Nintendo, it is the same story: segment profit rose 58.7 per cent to ¥16,973m on sales up 94.9 per cent, taking the electro-mechanical margin from 5.03 per cent to 4.10 per cent. The Nintendo business became less profitable per yen as it became bigger.

What the same company said on 13 November

On 13 November 2026 Hosiden published its half-year results for the six months to 30 September 2026, and they are the reason this is a story this week rather than a filing summary.

Sales up 9.9 per cent in a half-year in which Nintendo shipped 37.4 per cent fewer Switch 2 consoles — 6.49m, against 10.37m in the same half of the previous year — and 32.7 per cent fewer original Switch units, 1.27m against 1.89m. Nintendo's own revenue for the half fell 12.1 per cent, to ¥966.0bn.

The company left its full-year forecast untouched: ¥436,000m of sales (down 2.7 per cent on the year to March 2026) and ¥18,000m of operating profit (down 6.4 per cent). That guidance was first published on 8 May 2026 and has not been revised.

Subtracting the half-year actual from the full-year forecast gives the second half the company is implicitly predicting: ¥166,284m of sales, 18.0 per cent below the same six months a year earlier, and ¥8,774m of operating profit, 21.2 per cent below.

The shape of the year matters more than the level. Hosiden's second half is normally bigger than its first, because the console business is a holiday business:

A ratio of 0.62 would be the most front-loaded year in the three the filing covers. The company is not describing a collapse — the implied second-half operating margin, 5.28 per cent, is higher than the first half's 3.42 per cent — but it is describing a much smaller second half than the one that just ended.

One caution belongs on that arithmetic. Hosiden's forecast assumes ¥155 to the dollar. The European Central Bank's reference cross on 13 November 2026 put the yen at ¥160.0. A weaker yen than assumed raises yen-denominated revenue, so if the rate holds at ¥160 some of the guided decline does not arrive — and the volume decline underneath it is larger than the yen figure suggests, not smaller. The direction of the correction is not comfortable.

The divergence nobody has explained

For a company this dependent on one customer, Hosiden's revenue should track that customer. In the latest half it did not, and the quarterly split makes the gap sharper:

• April–June 2026: Hosiden net sales ¥98,130m, down 15.7 per cent on the year.
• July–September 2026: ¥171,586m, up 32.9 per cent on the year.
• Nintendo's implied July–September revenue, derived the same way from its own two filings: down 15.0 per cent.

A supplier billing 33 per cent more in a quarter when its customer's revenue fell 15 per cent is not a shipment proxy. Four explanations fit the public record, and the filing cannot choose between them:

1. Attach. The Switch 2 installed base reached 26.35m units by 30 September 2026. Controllers, docks and accessories sell against an installed base, not against new console shipments, and Hosiden's Nintendo work includes the parts that wear out.
2. Billing timing. A quarter that swings 48 points against its customer's revenue is a quarter in which invoices moved, not boxes.
3. Cost pass-through. If the memory inflation this desk has documented elsewhere is being billed through the assembly contract, Hosiden's sales rise while Nintendo's do not — the cost of the box goes up, the price of the box does not. This is speculation, and it is not supported by anything in the filing.
4. Non-Nintendo growth. Contradicted for the full year — everything that is not Nintendo shrank 6.3 per cent — but a half-year is not a year, and Hosiden does not break the segment down by end market.

What the divergence does establish is narrower and more useful: Hosiden's top line is not a console-shipment counter, and anyone reading it as one is reading it wrong. The concentration is real; the read-through is not clean.

China out, Vietnam in, and a warehouse of raw material

Three details in the same filings describe where the physical work is going.

The Chinese subsidiary is gone. The half-year report records that China Hosiden Co., Ltd. stopped production on 28 March 2026 and that the transfer of all its shares completed on 10 October 2026, for RMB 25m (about ¥580m), with an expected gain on sale of about ¥1,536m.

The capital is going to Vietnam. Of ¥21,516m of tangible fixed assets at 31 March 2026, ¥7,504m sits in Vietnam and ¥12,727m in Japan; China is down to ¥523m. The year's capital expenditure was for production equipment in Vietnam, in the amusement and mobile-communications fields.

The raw material is not being drawn down. Raw materials and supplies stood at ¥57,452m on 30 September 2026, against ¥49,381m a year earlier — up 16.3 per cent — and roughly ¥57.5bn is 2.6 months of the company's annual sales. The annual report flags this inventory as a critical accounting estimate, because some of the raw material is Nintendo-specific: 「アミューズメント関連向けの一部原材料については、顧客からの受注可能性及び将来の使用可能性を見積った適切な在庫水準…」 — for some amusement-related raw materials, the company compares an appropriate inventory level estimated from the possibility of orders and future usability against the quantity actually on hand. That is a supplier holding customer-specific material and marking it against an order forecast it does not control.

Three things this does not prove

It does not prove Hosiden assembles whole consoles. The company's own disclosure describes Nintendo only as a customer buying 機構部品 — mechanism components. The assembler characterisation comes from Bloomberg's reporting and from bill-of-lading records, not from Hosiden's filing. If Hosiden supplies controllers and modules rather than complete units, the ¥349.6bn is a components bill, not a build fee.

It does not prove the order book has collapsed. Hosiden's order backlog fell 38.2 per cent in the year to March 2026, to ¥56,417m, and its electro-mechanical backlog fell 40.6 per cent to ¥48,453m — while sales rose 81 per cent. That looks like a warning, but the year-earlier backlog was inflated by pre-launch Switch 2 orders queued at 31 March 2025. A launch-year base makes any year-on-year backlog comparison suspect, and this one should be treated as suspect.

It does not prove Nintendo's second half is 18 per cent smaller. That figure is this desk's subtraction of two company-published numbers, made at Hosiden's own exchange-rate assumption. Nintendo's own guidance implies a second half 10.7 per cent below the same period a year earlier, not 18. The two companies are not measuring the same thing.

One check came back negative and belongs in the record: receivables. Hosiden's trade receivables jumped from ¥25,813m at 31 March 2026 to ¥64,707m at 30 September 2026, which looks like the classic channel-stuffing signature until you compare it with the same date a year earlier — ¥60,846m — and to the March-to-September pattern, which is seasonal. Year on year, receivables rose 6.3 per cent against sales up 9.9 per cent. There is no anomaly there, and the hypothesis is dead.

What to watch

Hosiden reports third-quarter results in early February 2027. Three numbers in that filing will settle the open questions: whether the Nintendo share of sales rises past 78 per cent again; whether the non-Nintendo businesses stop shrinking; and whether the second-half sales figure lands near the ¥166bn the May guidance implies, or above it.

Nintendo reports the same week, with its own full-year forecast unchanged since 8 May. If the assembler's third quarter comes in above the guided run-rate and Nintendo does not raise, the gap is inventory. If both come in low, the second half is simply smaller than the launch year — which is what a console cycle looks like from the inside, at the one company whose entire income statement is now a bet on it.

Sources

• Hosiden Corporation, Consolidated Financial Results for the Six Months Ended September 30, 2026, 13 November 2026 — half-year sales, segment sales and profit, balance sheet, raw materials, receivables, the China Hosiden disposal, and the full-year forecast with its ¥155/USD assumption.
• Hosiden Corporation, Annual Securities Report, 76th term (有価証券報告書), June 2026 — the named-customer table (Nintendo ¥349,551m, 78.0%), the prior-year table (¥142,221m, 57.4%), sales by segment and region, capital expenditure, and the amusement raw-material accounting estimate.
• Hosiden Corporation, Annual Securities Report, 75th term, June 2025 — the year-earlier customer table, including Samsung Electronics Vietnam Thai Nguyen at ¥26,804m (12.2%) in the year to March 2024.
• Hosiden Corporation, Consolidated Financial Results for the Three Months Ended June 30, 2026, 7 August 2026 — first-quarter sales of ¥98,130m, used to derive the July–September quarter.
• Hosiden Corporation, Consolidated Financial Results for the Six Months Ended September 30, 2025, 7 November 2025 — prior-year half-year sales and the 30 September 2025 balance sheet used for the receivables comparison.
• Nintendo Co., Ltd., Consolidated Financial Results for the Six Months Ended September 30, 2026, 5 November 2026 — revenue ¥966,041m, full-year forecast ¥2,050,000m.
• Nintendo Co., Ltd., Consolidated Financial Results for the Fiscal Year Ended March 31, 2026, 8 May 2026 — revenue ¥2,313,051m, Switch 2 19.86m units and Switch 1 3.80m units for the year.
• Nintendo Co., Ltd., Dedicated Video Game Sales Units — Switch 2 lifetime hardware 26.35m units as of 30 September 2026.
• Nintendo Co., Ltd., Financial Results Explanatory Material, Second Quarter FY2026 — Switch 2 hardware 6.49m units (−37.4%) and Switch hardware 1.27m units (−32.7%) for the half; the IEEPA tariff refund booked in the first quarter.
• European Central Bank, euro foreign exchange reference rates, 13 November 2026 — €/JPY 176.83 and €/USD 1.1052, a dollar-yen cross of ¥160.0.
• Bloomberg, Why Your Nintendo Switch 2, Xbox Is Now 'Made in Vietnam' Not China — "Japan-listed Hosiden Corp. makes Switch and Switch 2 for Nintendo." Reporting, not a primary document; the full piece is paywalled and was not read beyond its published summary.
• LostInConsoles, U.S. console import records are going dark: Nintendo's have been silent since January 2023 — this desk's own bill-of-lading work, which records "Hosiden Vietnam Bac Giang" as a Nintendo shipper.