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Sat, Aug 25, 2001 - Page 21 News List

Nintendo says GameCube supply won't meet demand

BLOOMBERG , TOKYO

Nintendo Co will fall short of meeting demand for its GameCube in Japan and North America because of shortages in the supply of components such as NEC Corp-made graphics chips, Vice President Atsushi Asada said.

GameCube will debut in Sept. 14 in Japan and on Nov. 18 in the US. Nintendo plans to ship four million units by the end of March next year, not enough to satisfy expected demand, Asada said. GameCube is Nintendo's answer to a challenge from Microsoft Corp's Xbox console.

Kyoto-based Nintendo, like Sony Corp before it, is having trouble getting the chips that give the graphics produced by GameCube and Sony's PlayStation 2 a heightened sense of realism.

Shipping enough consoles is crucial for Nintendo if it is to beat back the Xbox, which will reach stores 10 days before GameCube.

"Nintendo has to save some [GameCubes] for the US release,'' said Soichiro Fukuda, an analyst with Nikko Salomon Smith Barney Ltd.

"It has to start shipping to the US by mid-October at the latest when you consider the amount of time it will take to make sure the product reaches retailers on time." Increasing production is not possible because key components for the machine, like the NEC-made chips, are made using special production lines, Asada said.

Failing to meet demand holds risks for Nintendo, analysts said. Sony has sold more than 15 million PlayStation 2 game players. Microsoft plans to sell 600,000 to 800,000 units of the Xbox on the first day, and 1 million to 1.5 million by year-end.

NEC makes microchips for the graphics controller used in the GameCube and for the console's memory card. The parts are made at NEC's plant in Kyushu, Japan, where production started in January, followed by test production this month.

Nintendo pushed back the US release date of the machine by about two weeks to ensure adequate supplies once the game system reaches stores.

Parts shortages are nothing new for Nintendo, creator of the Game Boy handheld player and Nintendo 64, the five-year-old precursor to the GameCube console.

In the year to March 2000, Nintendo's profit fell 35 percent from the previous year, marking the first decline in six years.

Sales also slumped because the No. 2 video-game maker ran short of components such as microchips and liquid crystal displays.

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