Ramping production would mean getting every one of their suppliers to ramp production, tooling more production lines, training more workers, building out QA and testing facilities, blah, blah, etc, etc. You don't make that kind of investment when demand is tapering (604k units in December, 436k in January, 335k in February). By time time you have the additional capacity, you don't need it.
Is this a joke? Demand is not tapering. Every one of those months' sales numbers were supply constrained. They didn't sell more because there weren't more to sell. Had more been available more would have been sold. And January was a 5 week month for NPD. Taking into account weekly sales the drop off was neglible.
Once you can walk into any store, and see plenty of Wiis on the shelf, and the numbers keep dropping, then you can say demand is tapering.