TOKYO -- A global chip crunch, on top of slowing demand for games as COVID restrictions ease, has delivered a blow to Nintendo's profit as the company continues to struggle to churn out its Switch gaming console.

The Japanese gaming giant on Thursday reported a 19% decline to 172 billion yen ($1.5 billion) in net profit for the first half of this fiscal year from the same period a year ago on the back of a 19% drop in revenue to 624 billion yen.

Looking ahead, Nintendo President Shuntaro Furukawa said he saw "no signs of improvement" in the supply of semiconductors, essential to the production of the company's consoles.

The weak result is in part due to the high base in the comparison period when Nintendo logged a record net profit in the year ended March 2021. Demand for video games surged to unprecedented levels last year as the pandemic forced people to stay home.

However, for the April-September period, Nintendo saw software sales fall 6% while sales of its Switch consoles also dropped. The company was only able to sell 8.28 million hardware units, including its handheld Switch Lite device, down 34% from a year ago.

The release of "Animal Crossing: New Horizons" in March 2020, which went on to become a global hit, had driven sales of its Switch console, setting the bar high for 2021. Animal Crossing sold over 14 million copies in the April-September period last year.

The semiconductor shortage has also hindered Nintendo's ability to produce more consoles. A surge in demand for consumer electronics amid the pandemic has led to disruptions in the chip supply chain, weighing on Nintendo's plans.

Nintendo's "Animal Crossing" sold over 14 million copies in the April-September period last year. (Photo courtesy of the company)

Furukawa said at a press conference on Thursday that the company was still struggling to get parts. "We are in a difficult situation due to the semiconductor shortage."

As a result, Nintendo expects to sell 24 million Switch consoles in the year to end-March, 1.5 million fewer than it had initially forecast. Compared with the previous year, the figure is down 17%.

However, Nintendo now expects annual net profit to fall 27%, better than an earlier forecast of a 29% decline. This is partly due to a positive impact from foreign exchange movements and higher-than-expected software sales it now sees.

The company revised up its annual software sales by 10 million copies to 200 million after the release of "Mario Party Superstars" last month while it also has other games from popular franchises lined up for the rest of the fiscal year, such as "Pokemon Legends: Arceus."

Compared with a year ago, software sales will still be down 13%, based on the revision.

However, Nintendo has been able to maintain stable digital download sales, which are highly profitable. Revenue from its subscription gaming service, Nintendo Switch Online, has also been high enough to support its profit margin.

This is an area in which the company can continue to thrive, at a time when the global chip crunch is still weighing on its production, particularly ahead of the year-end holiday shopping season.

Furukawa said, "We do not expect to be able to produce enough [consoles] to meet the expected demand for the holiday season... We are striving to produce as many units as possible with the cooperation of our production partners and suppliers."