Question: Does Nick Nack die? Did he suffocate in the suitcase?
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Answer: Likely not. He's still screaming that he'll get Bond as the junk sails away at the end. Presumably, either he and Bond came to an arrangement after the film or Bond turned him over to the authorities. At the VERY end of the movie you see Nick Nack is actually suspended high on the mast of the junk.
Captain Defenestrator