Atari attributed the decline to higher costs of memory chips resutling from a chip shortage.

Reports on the severity of a chip shortage, or on whether one exists at all, seem to vary.

Company executives expect semiconductor sales to jump to nearly $900 million this year, driven by a worldwide chip shortage that pushed up prices.

Analysts say profit margins are as high as 30 percent because a chip shortage has kept prices high.

They've created an illusion of a chip shortage.

"Our first-quarter results improved despite a short-term chip shortage that affected some large system shipments."

The company said the chip shortage had kept it from meeting demand for its most powerful G5-based PowerMac.

Gateway said that the chip shortages reduced its revenue in the fourth quarter by between $200 million and $250 million.

That decision is a setback for computer companies that view the price controls as contributing to current chip shortages.

Indeed, shipments of products such as memory boards and inexpensive personal computers are most likely to be hurt by the chip shortage.