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Dreamcast: Bad for the Imagination

Chip designers awake to profits nightmare

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Chip design firm Imagination had the wind taken out of its sails by Sega's decision to stop making Dreamcast consoles. The company followed yesterday's announcement with an immediate profit warning.

Imagination designs the graphics chips for the beleaguered gaming system and was expecting 22 per cent of its profits to come from work from Sega, and warned that its current-year profits would not meet expectations.

It put a brave face on though, saying that it would remain profitable. Brokers seem to concur, and figures of £3-4 million are said to be likely profits for this year.

Sega is planning to outsource that part of its business, and third party manufacturers such as Pace in the UK are expected to continue use of the chipset from Imagination.

One report in The Daily Mail suggested that a deal with ARM could be on the cards. The two companies are expected to work together on graphics cards for products like set top boxes, mobile phones and televisions. ®

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RIP Dreamcast: March 2001

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