Xbox 360 shortage linked to memory chip (MS Predicts Full Supply in 4-6 weeks)

RC Cola · Feb 14, 2006

http://www.mercurynews.com/mld/mercurynews/news/local/13864415.htm

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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I guess that partially explains the shortages (I think other things factored into shortages as well), but I'm also glad to see MS thinks that you'll be able to "walk into a store" and get one pretty soon.

Just a FYI, but the 360 sold about 249K units in January according to the NPD (compared to ~280K in December, with like 850K-900K LTD IIRC in the US), and was the 2nd best selling platform (beat by the PS2). Wonder if these changes will show up in the February numbers or if we'll have to wait until March.

arkoe · Feb 14, 2006

Those things are still backed up? Would've thought they'd had it figured out by now.

RC Cola · Feb 14, 2006

Well, if the January numbers are any indication, then yeah, they've had problems up to the end of last month. As I said, I wonder if they've since been able to "fix" this issue, and maybe we will see higher numbers in February. Maybe they were just having problems up until mid-January or so, and then they were able to make some large shipments in the last week or so of January (which wouldn't have been sold by the end of the month of course). In fact, I believe Celestica going online was announced at CES, and depending on when they started manufacturing consoles, their shipments may not have hit stores until around the same time as well (end of month). I guess we'll find out in a month or so, assuming NPD numbers get posted.

StupidMoniker · Feb 14, 2006

My local Target was still sold out of the Premium version today, though I don't know how much of an indicator that is.

Lil Pun · Feb 14, 2006

If they are in stock in 4-6 weeks as said I might get one. As I have said that COD 2 commercial makes me want one every single time I see it.

Svpernaut · Feb 15, 2006

arkoe said:

Those things are still backed up? Would've thought they'd had it figured out by now.
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They still sell out the day they hit the shelves... Microsoft is very pleased with it's turn out.

Lil Pun said:

If they are in stock in 4-6 weeks as said I might get one. As I have said that COD 2 commercial makes me want one every single time I see it.
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If that game makes you drool make sure to check out the AMAZING gameplay videos and screenshots of Ghost Recon: Advanced Warfighter that will be released March 8th! They just released some new videos over at GameSpot... hot damn I can't wait for this one.

Coach AI · Feb 15, 2006

Svpernaut said:

They still sell out the day they hit the shelves... Microsoft is very pleased with it's turn out.
.
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Well, in the US anyway. And I'd imagine they'd be much more pleased if they hadn't had supply problems, got more units out, and sold those as well.

With finally a solid group of games coming up in March, it may be time to seriously look at getting the 360 now...

Svpernaut · Feb 15, 2006

Rokkit said:

Well, in the US anyway. And I'd imagine they'd be much more pleased if they hadn't had supply problems, got more units out, and sold those as well.

With finally a solid group of games coming up in March, it may be time to seriously look at getting the 360 now...
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Actually, other then Japan the sales have been greater then expected with all of Europe being the big suprise... They knew it would do well in Europe but it flies off the shelves there faster then here.

Coach AI · Feb 15, 2006

Pulling Europe out of Sony's stranglehold would be quite an achievement. Did they get greater shipments for launch there?

And yeah, I was kinda referring to Japan. The Worldwide launch wasn't a bad idea...but I think, in retrospect, the allocations were a little off.

jtotheb · Feb 15, 2006

I keep seeing them sold online in Bundles...but never the system by itself. I have recently started looking for one, thinking that now that the hype has subsided somewhat.....but still no luck.

Oh well...I guess I'll get one when I get one. I'm more anxious about next year's versions of the next-gen sports games. I think that Madden looks incredible, but I need things (besides graphics) that help distinguish the game from the regular Xbox version.

We should start a forum just for Xbox 360 sightings. What stores got some in, etc.

rrj_gamz · Feb 15, 2006

This sucks from a business perspective...Huge opportunity lost as they had an opportunity...Reminds me of Sega Dreamcast trying to rush out...Hell, as much as I hate Sony products, at least they're waiting and not rushing, or at least that's the impression I got...

JayZ750 · Feb 15, 2006

Who is still buying a PS2...maybe its just me, since PS has always been the one system I didn't own for some reason or another, but even people who like them.

It has to just be kids reaching the age where their parents will finally let them get a system, right? I mean, it will still be a few months, but the PS3 is coming out sooner rather than later...just wait a bit.

Svpernaut · Feb 15, 2006

rrj_gamz said:

This sucks from a business perspective...Huge opportunity lost as they had an opportunity...Reminds me of Sega Dreamcast trying to rush out...Hell, as much as I hate Sony products, at least they're waiting and not rushing, or at least that's the impression I got...
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Every gaming system that comes out now has shortages, from the launch of Nintendo it has been that way... demand will always outpace supplies for the first couple of quarters, PS2 will be no different. People who continually bash the 360 have yet to see where MS is going to make nearly all of their profits... XBox Live Marketplace and Arcade. Microsoft was brilliant in the release of the new Live system and has made millions off of Live arcade downloads so far. I personally know about 20 people with 360's (friends and coworkers) and everyone of them have downloaded at least two games from the Marketplace, which is pure profit.

I will be buying two PS3's the day it comes out, and they will be posted on eBay shortly afterwards.

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Xbox 360 shortage linked to memory chip (MS Predicts Full Supply in 4-6 weeks)

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