THE chips may be down for the UK video games industry, but one North-East chain is pressing ahead with plans to expand.

Despite the introduction of the long- awaited PlayStation 2 machine, UK publishers and stores have endured a bad time in the past six months.

Sega's decision to pull out of the hardware market - because it was losing millions on its Dreamcast machine - are an indication of how volatile it has become.

Despite this problem, North-East games chain Chips is set to roll out a major scheme for the group's expansion nationwide.

Don McCabe, a partner in the Middlesbrough group, said the Chips franchise would see a store opening soon in Stafford.

The group, which already has seven sites across the North-East, hopes to open in another four locations before Christmas.

The Chips website business is also bucking the dot com trend.

Mr McCabe said: "The industry may be going through a rocky patch, but we are doing very well.

"The franchise operation launched last year is about to bear fruit and the business we are doing over the web has been phenomenal."

The Chips Internet operation received another fillip recently when it was voted the best UK games site by influential industry magazine MCV.

The company was started by Mr McCabe and business partner Nik Agar in 1985.

Mr Agar said: "At the time, there was just one magazine, Computer and Video Games, dedicated to the market. Worse still, there was nowhere to buy software locally."

So he decided to start his own shop. Meeting Mr McCabe was the catalyst that led to the first Chips store, which opened in Linthorpe Road, Middlesbrough.