The Japanese giant said it expected stronger software sales for the year to March 2022, on the back of healthy sales in the first half and ahead of releases including three titles in the popular Pokemon franchise.

But it lowered its annual sales target for its Switch console as a worldwide chip shortage continues to affect many industries including video games.

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"We lowered planned shipments for the second half after we reviewed our production plan, facing the impact of a global supply-demand crunch of semiconductors and other parts," Nintendo said in a statement.

Japanese media reported this week that annual Switch production was expected to fall around 20 percent from its target for the current fiscal year due to the chip crunch.

Despite the headwinds, the Kyoto-based firm projected net profit at 350 billion yen ($3.1 billion) for the year to March 2022, up from an earlier estimate of 340 billion yen.

And it raised its software sales target to 200 million units, "considering sales results in the first half".

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