Business technology site Digitimes is reporting that Asustek owned manufacturing firms Pegatron and Unihan have struck a deal with Microsoft to produce around 500,000 Xbox 360 consoles a month from its bases in China.

Both bases are also OEM producers of Sony’s PS3.

The news comes after Microsoft blamed its North American hardware sales defeat at the hands of Sony’s PS3 on supply constraints – though it did at the time promise an improvement by next month.

Celestica and Flextronics are the current OEM builders of Microsoft’s machine, with initial manufacturer Wistron pulling out of its deal with Microsoft last year. Wistron is also involved in the production of Nintendo’s Wii.

Thanks to Spong for the heads up.