Welsh factory to produce Sega video-game catridges: First contract outside Far East goes to AB Electronic

SEGA, the Japanese video games giant, has begun sourcing material in South Wales - its first manufacturing move outside the Far East. The company, best known for its Sonic the Hedgehog character, has awarded AB Electronic Assemblies, now part of the TT Group, a contract to make games cartridges for the Sega Megadrive console.

The first games to roll off the production line include Asterix and Aladdin, which is being launched in advance of the UK opening of Disney's film of the same name. AB Electronic Assemblies will make games for the entire European market, starting with 200,000 in November and building up to an annual 6 million units.

Until now Sega has made all its games software in Japan, and the hardware in various places in the Far East. By moving manufacturing into Europe, the company aims to avoid high Japanese labour costs and cut exposure to the yen. Sega also sees a need to reduce transportation and duty costs. New games software tends to be sent by costly air freight, to reduce time to the market.

Mark Opzoomer, commercial and finance director for Sega Europe, said: 'The production line in South Wales has been set up under a tight schedule and is rolling in time for our busiest season.'

He added that the company was assessing three European sites, including one in the UK, for the manufacture of games on compact disc format.

Mr Opzoomer said that sourcing in Europe would simplify the overall business. One reason Wales was chosen is the existing base of Japanese manufacturing and expertise in the region.

Sega had a turnover of pounds 2.5bn in 1992/93, pounds 600m of which was accounted for by Sega Europe. The group is seen as an increasing threat to Nintendo, also Japanese and the world's largest maker of video games.

The fast-growing video games market in Britain is worth about pounds 700m to pounds 750m a year, including hardware and software. In Europe as a whole, people spend about pounds 3bn a year on video games.

(Photograph omitted)