Unnamed sources told the Mercury News that Infineon wasn't able to produce enough quality GDDR3 memory chips. Xbox 360 contract manufacturers Wistron and Flextronics reportedly had to sort through Infineon chip shipments, separating the good from the bad, which wasted both time and components.

Rejected chips couldn't keep up with the Xbox 360's 700 megahertz speed, and could noticeably affect the performance of the console if installed.Currently, Samsung is the only supplier other than Infineon that supplies Microsoft with the GDDR3 memory, a fact that increases the plausibility of such a component issue.

Xbox boss Peter Moore refused to specify the cause of the hold-up. "We have more than 200 suppliers and I'm not going to point the finger at any one of them."Moore said at last week's DICE Summit that "Within the next four to six weeks, anybody will be able to walk into a store and buy an Xbox 360," and that component shortages "have been fixed." A third contract manufacturer Celestica is expected to alleviate some of the supply issues.

Nam Hyung Kim, an analyst with iSuppli told Mercury News. "I was concerned even before they released the Xbox 360 that they wouldn't get enough supply. This was a very aggressive plan by Microsoft. To me, it was risky to go ahead. If there is a shortage of these chips, it could very well cause a shortage of the Xbox 360."