Nvidia delays new game device after finding problem

A sales man demonstrates a computer game in a display area of Nvidia Corp. during the second day of the annual 2007 Computex Taipei June 6, 2007.

SAN FRANCISCO (Reuters) - Nvidia Corp (NVDA.O) is delaying sales of its new handheld game gadget, a setback in the chipmaker's bid to use its appeal with personal computer gamers to challenge console makers like Sony Corp (6758.T) and Microsoft Corp (MSFT.O).

On Wednesday, a day before the scheduled launch, Nvidia said it had discovered a "mechanical issue" in the Shield multimedia device, which lets users play Android and PC games using either the built-in screen or on their TVs.

It will be shipped in July.

Nvidia's graphics chips are well-known to enthusiasts in their 20s who deck out desktop computers with high-end components to get the best out of first-person shooters and other games.

The Santa Clara, California company hopes some of those customers will also be drawn to Shield, which uses Nvidia's Tegra 4 mobile chip, has a pop-up retina display, and runs the same games as those on Android tablets and smartphones.

The portable device also shows movies, plays music, stores e-books, and can be used to surf the Web.

As PC sales suffer from the growing popularity of tablets, Nvidia has staked its future on using its PC graphics expertise to make high-performance processors for mobile devices.

Last week Nvidia cut the price of the Shield to $299 from $349.

(Reporting by Noel Randewich; Editing by Richard Chang)