NEWS - Tuesday, February 14, 2006

Xbox 360 shortage linked to memory chip

The shortage of Xbox 360 video game consoles that left many holiday shoppers in angst was due in part to Microsoft’s decision to use a new kind of memory chip from a German company, Infineon Technologies, according to people who are familiar with the game box’s design. The blockbuster video-game box has been hard to find on store shelves since it debuted in November only to sell out early during the holiday season, prompting complaints. One of two companies supplying the Xbox 360’s storage memory chips, Infineon, has had trouble making enough of the chips at the right speed for the game console that debuted last November, according to the sources. As a result Microsoft has not been able to meet the demand for the console. Peter Moore, head of Microsoft’s game division, declined to comment on whether there was a memory chip shortage. He blamed the scarcity of 360s on ``component shortages’’ but refused to pinpoint the problem. He said last week that the consoles would be more plentiful in stores within in four to six weeks thanks to the addition of a new contract manufacturer, Celestica. ``We have more than 200 suppliers and I’m not going to point the finger at any one of them,’’ he said. Infineon declined comment. Other Microsoft executives say that the shortage wasn’t due to any single problem, but a variety of problems that included component shortages as well as normal start-up delays for a huge manufacturing project. The Xbox 360 has more than 1,700 components in it. Critics suggest that Microsoft has squandered an opportunity to take the leadership in video-game boxes away from the No. 1 maker, Sony, which is expected to launch the PlayStation 3 in North America this fall. Sources say the shortage of the Infineon memory chips has prevented Microsoft’s contract manufacturers, Wistron and Flextronics, from assembling enough consoles. Instead, those manufacturers have had to spend time sorting good chips from bad chips. Specifically, the sources say Infineon wasn’t able to make enough GDDR3 (graphics double data rate) memory chips for the Xbox 360. Each box has 512 megabytes of GDDR3 that stores a game’s data. Both Infineon and Samsung supply GDDR3 chips to Microsoft. Some Infineon chips ran slower than 700-megahertz speed that was required, according to the sources. This was a big problem because the Xbox 360 has only a single highway (dubbed unified memory architecture) connecting memory with two processors, the graphics chip and microprocessor. When either of those chips can’t access memory as needed because of the slow memory chips, then the processing within the entire system bogs down. As a result, sources said, Microsoft has had to start sorting the slow GDDR3 chips from the fast ones, adding a delay to the production of the boxes and limiting the total numbers it can build. ``The faster the memory goes, the less room there is for error in a system like the Xbox 360,’’ said Shane Rau, an analyst at International Data Corp. Rau wasn’t aware of the console chip shortage itself, but he said that technical problem -- as described by sources -- was plausible. The fastest GDDR3 chips are able to keep up with the rest of the system. But the slow memory chips can actually slow down a game so much that it is noticeably slow to gamers, sources said. That’s why Microsoft chose not to ship any systems with the slow chips in them. It isn’t clear how much of the Xbox shortage the GDDR3 problem could account for, since Microsoft has cited a variety of problems. Nam Hyung Kim, an analyst at market researcher iSuppli, said that it is plausible that a shortage of GDDR3 memory chips caused the shortage of Xbox 360s. He said that only Samsung and Infineon are able to make the premium chips, so a big customer such as Microsoft would have nowhere to turn if it couldn’t get enough from either supplier. Creators of high-end graphics cards for personal computers also needed a lot of the same memory chips. ``I was concerned even before they released the Xbox 360 that they wouldn’t get enough supply,’’ Kim said. ``This was a very aggressively plan by Microsoft. To me, it was risky to go ahead with it. If there is a shortage of these chips, it could very well cause a shortage of the Xbox 360.’’

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