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They already increased production.

Nintendo announced in spring that they would increase the oproduction of Wii by 2 or 3 milions units for the christmas 2007 time compared to their original forecast.

However they explained that it wouldn't be enough to satisfy demand but that it was technicaly difficult for them to increase production more.

I suppose that a complex product as the Wii as a complex supply chain and that some of the components (processor, ram, GPU, chipset, drive or whatever) are bottlenecking production, or nintendo can't secure production units etc...

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